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FHI vs. SEIC: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Financial - Investment Management stocks have likely encountered both Federated Hermes (FHI - Free Report) and SEI Investments (SEIC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Federated Hermes and SEI Investments are holding a Zacks Rank of # 2 (Buy). 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 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.

FHI currently has a forward P/E ratio of 9.90, while SEIC has a forward P/E of 17.33. We also note that FHI has a PEG ratio of 0.81. 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. SEIC currently has a PEG ratio of 1.44.

Another notable valuation metric for FHI is its P/B ratio of 2.71. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SEIC has a P/B of 4.32.

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

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


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