Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Ameriprise Financial Services (AMP) and Ares Management (ARES). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Ameriprise Financial Services and Ares Management have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
AMP currently has a forward P/E ratio of 13.28, while ARES has a forward P/E of 31.21. We also note that AMP has a PEG ratio of 0.79. 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. ARES currently has a PEG ratio of 1.32.
Another notable valuation metric for AMP is its P/B ratio of 8.79. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ARES has a P/B of 10.34.
These metrics, and several others, help AMP earn a Value grade of B, while ARES has been given a Value grade of D.
Both AMP and ARES are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AMP is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
Ares Management Corporation (ARES) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.