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GS or MS: Which Is the Better Value Stock Right Now?

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Investors interested in Financial - Investment Bank stocks are likely familiar with Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Goldman Sachs and Morgan Stanley are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

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.

GS currently has a forward P/E ratio of 6.93, while MS has a forward P/E of 12.76. We also note that GS has a PEG ratio of 0.62. 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. MS currently has a PEG ratio of 1.82.

Another notable valuation metric for GS is its P/B ratio of 1.31. 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, MS has a P/B of 1.85.

These are just a few of the metrics contributing to GS's Value grade of B and MS's Value grade of C.

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


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

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