Back to top

Image: Bigstock

GS vs. TW: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of Goldman Sachs (GS - Free Report) and Tradeweb Markets (TW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Goldman Sachs and Tradeweb Markets are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

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.

GS currently has a forward P/E ratio of 11.43, while TW has a forward P/E of 52.17. We also note that GS has a PEG ratio of 0.59. 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. TW currently has a PEG ratio of 4.96.

Another notable valuation metric for GS is its P/B ratio of 1.40. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TW has a P/B of 3.41.

Based on these metrics and many more, GS holds a Value grade of B, while TW has a Value grade of F.

Both GS and TW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GS is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


The Goldman Sachs Group, Inc. (GS) - free report >>

Tradeweb Markets Inc. (TW) - free report >>

Published in