Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of The PNC Financial Services Group, Inc (PNC) and 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 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.
The PNC Financial Services Group, Inc and Tradeweb Markets are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PNC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
PNC currently has a forward P/E ratio of 13.23, while TW has a forward P/E of 37.16. We also note that PNC has a PEG ratio of 1.64. 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. TW currently has a PEG ratio of 1.86.
Another notable valuation metric for PNC is its P/B ratio of 1.47. 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, TW has a P/B of 4.64.
These are just a few of the metrics contributing to PNC's Value grade of B and TW's Value grade of F.
PNC has seen stronger estimate revision activity and sports more attractive valuation metrics than TW, so it seems like value investors will conclude that PNC is the superior option right now.
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