Investors with an interest in Financial - Investment Management stocks have likely encountered both Principal Financial (PFG - Free Report) and BrightSphere Investment Group (BSIG - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Principal Financial and BrightSphere Investment Group are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PFG currently has a forward P/E ratio of 7.56, while BSIG has a forward P/E of 8.24. We also note that PFG has a PEG ratio of 1.15. 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. BSIG currently has a PEG ratio of 2.68.
Another notable valuation metric for PFG is its P/B ratio of 0.74. 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, BSIG has a P/B of 4.63.
These are just a few of the metrics contributing to PFG's Value grade of A and BSIG's Value grade of C.
Both PFG and BSIG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PFG is the superior value option right now.