Investors looking for stocks in the Financial - Investment Bank sector might want to consider either BGC Group (BGC) or Tradeweb Markets (TW). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
BGC Group has a Zacks Rank of #1 (Strong Buy), while Tradeweb Markets has a Zacks Rank of #3 (Hold) right now. This means that BGC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 7.87, while TW has a forward P/E of 44.23. We also note that BGC has a PEG ratio of 0.33. 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. TW currently has a PEG ratio of 2.86.
Another notable valuation metric for BGC is its P/B ratio of 4.07. 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, TW has a P/B of 5.48.
Based on these metrics and many more, BGC holds a Value grade of B, while TW has a Value grade of F.
BGC sticks out from TW 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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This article originally published on Zacks Investment Research (zacks.com).
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