Investors interested in Financial - Investment Management stocks are likely familiar with Affiliated Managers Group (AMG) and BlackRock (BLK). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Affiliated Managers Group has a Zacks Rank of #2 (Buy), while BlackRock has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AMG is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AMG currently has a forward P/E ratio of 10.17, while BLK has a forward P/E of 19.05. We also note that AMG has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BLK currently has a PEG ratio of 1.24.
Another notable valuation metric for AMG is its P/B ratio of 2.4. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BLK has a P/B of 2.82.
Based on these metrics and many more, AMG holds a Value grade of A, while BLK has a Value grade of D.
AMG stands above BLK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMG is the superior value option right now.
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Affiliated Managers Group, Inc. (AMG): Free Stock Analysis Report
BlackRock (BLK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).