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AB vs. TROW: Which Stock Is the Better Value Option?

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Investors with an interest in Financial - Investment Management stocks have likely encountered both AllianceBernstein (AB - Free Report) and T. Rowe Price (TROW - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, AllianceBernstein has a Zacks Rank of #2 (Buy), while T. Rowe Price 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 AB has an improving earnings outlook. But this is just one piece of the puzzle 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 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.

AB currently has a forward P/E ratio of 10.96, while TROW has a forward P/E of 15.19. We also note that AB has a PEG ratio of 1.23. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TROW currently has a PEG ratio of 1.52.

Another notable valuation metric for AB is its P/B ratio of 1.91. 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 4.61.

These metrics, and several others, help AB earn a Value grade of B, while TROW has been given a Value grade of C.

AB sticks out from TROW in both our Zacks Rank and Style Scores models, so value investors will likely feel that AB is the better option right now.


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T. Rowe Price Group, Inc. (TROW) - free report >>

AllianceBernstein Holding L.P. (AB) - free report >>

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