Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Bread Financial Holdings (BFH) and Brookfield Asset Management (BAM). 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.
Bread Financial Holdings has a Zacks Rank of #2 (Buy), while Brookfield Asset Management has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than BAM has recently. However, value investors will care about much more than just this.
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.
BFH currently has a forward P/E ratio of 8.13, while BAM has a forward P/E of 25.63. We also note that BFH has a PEG ratio of 0.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BAM currently has a PEG ratio of 1.92.
Another notable valuation metric for BFH is its P/B ratio of 1.14. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BAM has a P/B of 8.39.
Based on these metrics and many more, BFH holds a Value grade of A, while BAM has a Value grade of F.
BFH sticks out from BAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that BFH is the better option right now.
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Bread Financial Holdings, Inc. (BFH): Free Stock Analysis Report
Brookfield Asset Management Ltd. (BAM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).