Investors looking for stocks in the Financial - Investment Bank sector might want to consider either BGC Group (BGC) or Moelis (MC). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Right now, BGC Group is sporting a Zacks Rank of #2 (Buy), while Moelis has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that BGC likely has seen a stronger improvement to its earnings outlook than MC has recently. But this is only part of the picture for value investors.
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.
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.
BGC currently has a forward P/E ratio of 8.04, while MC has a forward P/E of 20.26. We also note that BGC has a PEG ratio of 0.41. 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. MC currently has a PEG ratio of 0.77.
Another notable valuation metric for BGC is its P/B ratio of 4.26. 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, MC has a P/B of 8.18.
Based on these metrics and many more, BGC holds a Value grade of A, while MC has a Value grade of D.
BGC sticks out from MC in both our Zacks Rank and Style Scores models, so value investors will likely feel that BGC is the better option right now.
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BGC Group, Inc. (BGC): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).