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AMG vs. BLK: Which Stock Should Value Investors Buy Now?

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Investors interested in Financial - Investment Management stocks are likely familiar with Affiliated Managers Group (AMG - Free Report) and BlackRock (BLK - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Affiliated Managers Group is sporting a Zacks Rank of #2 (Buy), while BlackRock 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 AMG has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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.

AMG currently has a forward P/E ratio of 8.65, while BLK has a forward P/E of 22.10. We also note that AMG has a PEG ratio of 0.58. 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. BLK currently has a PEG ratio of 2.21.

Another notable valuation metric for AMG is its P/B ratio of 1.94. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BLK has a P/B of 3.57.

Based on these metrics and many more, AMG holds a Value grade of A, while BLK has a Value grade of D.

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


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