Back to top

Image: Bigstock

PAX vs. ARES: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Patria Investments (PAX - Free Report) or Ares Management (ARES - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Patria Investments and Ares Management are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PAX has an improving earnings outlook. 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.

PAX currently has a forward P/E ratio of 7.83, while ARES has a forward P/E of 29.52. We also note that PAX has a PEG ratio of 0.66. 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. ARES currently has a PEG ratio of 1.

Another notable valuation metric for PAX is its P/B ratio of 1.35. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ARES has a P/B of 9.07.

These are just a few of the metrics contributing to PAX's Value grade of A and ARES's Value grade of F.

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


See More Zacks Research for These Tickers


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


Ares Management Corporation (ARES) - free report >>

Patria Investments Limited (PAX) - free report >>

Published in