Back to top

Image: Bigstock

AMG or TROW: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Financial - Investment Management stocks are likely familiar with Affiliated Managers Group (AMG - Free Report) and T. Rowe Price (TROW - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Affiliated Managers Group is sporting a Zacks Rank of #2 (Buy), while T. Rowe Price has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that AMG likely has seen a stronger improvement to its earnings outlook than TROW has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

AMG currently has a forward P/E ratio of 8, while TROW has a forward P/E of 15.62. We also note that AMG has a PEG ratio of 1. 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. TROW currently has a PEG ratio of 2.23.

Another notable valuation metric for AMG is its P/B ratio of 1.65. 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, TROW has a P/B of 3.03.

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

AMG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AMG is likely the superior value option right now.


See More Zacks Research for These Tickers


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


T. Rowe Price Group, Inc. (TROW) - free report >>

Affiliated Managers Group, Inc. (AMG) - free report >>

Published in