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IX vs. MCO: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Orix (IX - Free Report) or Moody's (MCO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Right now, Orix is sporting a Zacks Rank of #2 (Buy), while Moody's 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 IX 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

IX currently has a forward P/E ratio of 8, while MCO has a forward P/E of 29.12. We also note that IX has a PEG ratio of 2.47. 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. MCO currently has a PEG ratio of 2.91.

Another notable valuation metric for IX is its P/B ratio of 0.71. 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, MCO has a P/B of 32.80.

These metrics, and several others, help IX earn a Value grade of A, while MCO has been given a Value grade of D.

IX has seen stronger estimate revision activity and sports more attractive valuation metrics than MCO, so it seems like value investors will conclude that IX is the superior option right now.


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