AMG or BLK: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Financial - Investment Management sector have probably already heard of 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.

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, Affiliated Managers Group has a Zacks Rank of #2 (Buy), while BlackRock has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AMG likely has seen a stronger improvement to its earnings outlook than BLK has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

AMG currently has a forward P/E ratio of 9.60, while BLK has a forward P/E of 18.83. We also note that AMG has a PEG ratio of 0.48. 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. BLK currently has a PEG ratio of 1.16.

Another notable valuation metric for AMG is its P/B ratio of 2.36. 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, BLK has a P/B of 2.82.

Based on these metrics and many more, AMG holds a Value grade of B, 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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This article originally published on Zacks Investment Research (zacks.com).

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