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MS vs. WETF: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Financial - Investment Bank stocks have likely encountered both Morgan Stanley (MS - Free Report) and WisdomTree Investments, Inc. . 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Morgan Stanley has a Zacks Rank of #1 (Strong Buy), while WisdomTree Investments, Inc. has 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 MS has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

MS currently has a forward P/E ratio of 12.60, while WETF has a forward P/E of 21.37. We also note that MS has a PEG ratio of 1.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WETF currently has a PEG ratio of 1.48.

Another notable valuation metric for MS is its P/B ratio of 1.58. 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, WETF has a P/B of 2.92.

Based on these metrics and many more, MS holds a Value grade of B, while WETF has a Value grade of D.

MS stands above WETF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MS is the superior value option right now.


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