PAX vs. KKR: Which Stock Is the Better Value Option?

Investors interested in Financial - Investment Management stocks are likely familiar with Patria Investments (PAX) and KKR & Co. Inc. (KKR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Patria Investments and KKR & Co. Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PAX likely has seen a stronger improvement to its earnings outlook than KKR has recently. However, value investors will care about much more than just this.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PAX currently has a forward P/E ratio of 8.10, while KKR has a forward P/E of 16.49. We also note that PAX has a PEG ratio of 0.76. 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. KKR currently has a PEG ratio of 0.88.

Another notable valuation metric for PAX is its P/B ratio of 1.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, KKR has a P/B of 1.29.

Based on these metrics and many more, PAX holds a Value grade of A, while KKR has a Value grade of D.

PAX has seen stronger estimate revision activity and sports more attractive valuation metrics than KKR, so it seems like value investors will conclude that PAX is the superior option right now.

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

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