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 offers value investors a better bang for their buck right now? We'll need to 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.
Bread Financial Holdings and Brookfield Asset Management are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than BAM has recently. But this is just one factor that value investors are interested in.
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.
BFH currently has a forward P/E ratio of 8.64, while BAM has a forward P/E of 25.97. We also note that BFH has a PEG ratio of 0.86. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BAM currently has a PEG ratio of 1.82.
Another notable valuation metric for BFH is its P/B ratio of 1.11. 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, BAM has a P/B of 9.11.
These are just a few of the metrics contributing to BFH's Value grade of A and BAM's Value grade of F.
BFH 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 BFH is likely the superior value 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).