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Mast Global Battery Recycling & Production ETF (EV) - free report >>
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Mast Global Battery Recycling & Production ETF (EV) - free report >>
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EV vs. ARES: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial - Investment Management sector might want to consider either Eaton Vance (EV - Free Report) or Ares Management (ARES - Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Eaton Vance is sporting a Zacks Rank of #2 (Buy), while Ares Management has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EV likely has seen a stronger improvement to its earnings outlook than ARES has recently. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
EV currently has a forward P/E ratio of 12.04, while ARES has a forward P/E of 23.79. We also note that EV has a PEG ratio of 2.14. 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. ARES currently has a PEG ratio of 3.17.
Another notable valuation metric for EV is its P/B ratio of 3.58. 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 5.99.
These are just a few of the metrics contributing to EV's Value grade of B and ARES's Value grade of F.
EV sticks out from ARES in both our Zacks Rank and Style Scores models, so value investors will likely feel that EV is the better option right now.