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

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Investors with an interest in Financial - Investment Bank stocks have likely encountered both Morgan Stanley (MS - Free Report) and Tradeweb Markets (TW - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Both Morgan Stanley and Tradeweb Markets have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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 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 12.18, while TW has a forward P/E of 58.55. We also note that MS has a PEG ratio of 1.73. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TW currently has a PEG ratio of 2.79.

Another notable valuation metric for MS is its P/B ratio of 1.75. 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, TW has a P/B of 4.21.

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

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


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