Investors with an interest in Financial - Investment Bank stocks have likely encountered both Nomura Holdings (NMR - Free Report) and Tradeweb Markets (TW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.
Right now, Nomura Holdings is sporting a Zacks Rank of #2 (Buy), while Tradeweb Markets has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NMR likely has seen a stronger improvement to its earnings outlook than TW has recently. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
NMR currently has a forward P/E ratio of 6.37, while TW has a forward P/E of 45.65. We also note that NMR has a PEG ratio of 0.12. 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 2.30.
Another notable valuation metric for NMR is its P/B ratio of 0.61. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TW has a P/B of 2.70.
Based on these metrics and many more, NMR holds a Value grade of B, while TW has a Value grade of D.
NMR has seen stronger estimate revision activity and sports more attractive valuation metrics than TW, so it seems like value investors will conclude that NMR is the superior option right now.