NMR vs. TW: Which Stock Is the Better Value Option?

Investors interested in Financial - Investment Bank stocks are likely familiar with Nomura Holdings (NMR) and Tradeweb Markets (TW). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Nomura Holdings has a Zacks Rank of #2 (Buy), while Tradeweb Markets has a Zacks Rank of #3 (Hold). This means that NMR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

NMR currently has a forward P/E ratio of 9.45, while TW has a forward P/E of 27.63. We also note that NMR has a PEG ratio of 1.05. 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. TW currently has a PEG ratio of 1.75.

Another notable valuation metric for NMR is its P/B ratio of 1.08. 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, TW has a P/B of 3.53.

These metrics, and several others, help NMR earn a Value grade of B, while TW has been given a Value grade of F.

NMR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NMR is likely the superior value option right now.

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

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