Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Atlas (ATCO - Free Report) and T. Rowe Price (TROW - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Both Atlas and T. Rowe Price have a Zacks Rank of # 2 (Buy) right now. 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 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.
ATCO currently has a forward P/E ratio of 8.91, while TROW has a forward P/E of 14.72. We also note that ATCO has a PEG ratio of 0.54. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TROW currently has a PEG ratio of 1.88.
Another notable valuation metric for ATCO is its P/B ratio of 0.58. 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, TROW has a P/B of 4.26.
These are just a few of the metrics contributing to ATCO's Value grade of A and TROW's Value grade of C.
Both ATCO and TROW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATCO is the superior value option right now.