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PFG vs. HRGLY: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Financial - Investment Management sector might want to consider either Principal Financial (PFG - Free Report) or Hargreaves Lansdown plc . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Principal Financial has a Zacks Rank of #2 (Buy), while Hargreaves Lansdown plc has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PFG has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

PFG currently has a forward P/E ratio of 10, while HRGLY has a forward P/E of 43.85. We also note that PFG has a PEG ratio of 2.17. 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. HRGLY currently has a PEG ratio of 3.62.

Another notable valuation metric for PFG is its P/B ratio of 1.24. 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, HRGLY has a P/B of 25.34.

These are just a few of the metrics contributing to PFG's Value grade of B and HRGLY's Value grade of D.

PFG has seen stronger estimate revision activity and sports more attractive valuation metrics than HRGLY, so it seems like value investors will conclude that PFG is the superior option right now.


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