PIPR vs. MCO: Which Stock Is the Better Value Option?

Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Piper Sandler Companies (PIPR) and Moody's (MCO). But which of these two companies is the best option for those looking for undervalued stocks? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Piper Sandler Companies has a Zacks Rank of #2 (Buy), while Moody's 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 PIPR is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PIPR currently has a forward P/E ratio of 15.83, while MCO has a forward P/E of 27.14. We also note that PIPR has a PEG ratio of 1.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MCO currently has a PEG ratio of 2.44.

Another notable valuation metric for PIPR is its P/B ratio of 3.31. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MCO has a P/B of 25.17.

These are just a few of the metrics contributing to PIPR's Value grade of B and MCO's Value grade of D.

PIPR sticks out from MCO in both our Zacks Rank and Style Scores models, so value investors will likely feel that PIPR is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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