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FHI vs. BLK: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial - Investment Management sector might want to consider either Federated Hermes (FHI - Free Report) or BlackRock Finance (BLK - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Federated Hermes and BlackRock Finance are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FHI is likely seeing its earnings outlook improve to a greater extent. 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 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.
FHI currently has a forward P/E ratio of 9.71, while BLK has a forward P/E of 21.30. We also note that FHI has a PEG ratio of 1.05. 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. BLK currently has a PEG ratio of 1.65.
Another notable valuation metric for FHI is its P/B ratio of 3.10. 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, BLK has a P/B of 3.76.
Based on these metrics and many more, FHI holds a Value grade of A, while BLK has a Value grade of F.
FHI sticks out from BLK in both our Zacks Rank and Style Scores models, so value investors will likely feel that FHI is the better option right now.