Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put OM ASSET MANAGEMENT LTD stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, OM ASSET MANAGEMENT has a trailing twelve months PE ratio of 11.89, as you can see in the chart below:



This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.26. If we focus on the long-term PE trend, OM ASSET MANAGEMENT’s current PE level puts it lightly below its midpoint of 11.98, and well below its highs of 15.07 achieved in the past few years. This suggests that it could be a good time for value investors to enter into the stock.
 


Further, the stock’s PE also compares favorably with the Zacks classified Finance sector’s trailing twelve months PE ratio, which stands at 15.28. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.



We should also point out that OM ASSET MANAGEMENT has a forward PE ratio (price relative to this year’s earnings) of just 10.51, so it is fair to say that a slightly more value-oriented path may be ahead for OM ASSET MANAGEMENT stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, OM ASSET MANAGEMENT has a P/S ratio of about 2.60. This is a bit lower than the S&P 500 average, which comes in at 2.93 right now, indicating that the stock is undervalued from this aspect too.



Broad Value Outlook

In aggregate, OM ASSET MANAGEMENT currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes OM ASSET MANAGEMENT a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for OM ASSET MANAGEMENT is just 0.75, a level that is far lower than the industry average of 1.45. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, OMAM is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though OM ASSET MANAGEMENT might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘B’. This gives OMAM a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have quite encouraging. The current quarter and full year have seen one and two estimates go higher, respectively in the past sixty days – compared to two no downward revisions in the same time period.

This has had a meaningful impact on the consensus estimate, as the current quarter consensus estimate has risen by 2.8% in the past two months, while the full year estimate has increased 2.1% in the same time frame. You can see the consensus estimate trend and recent price action for the stock in the chart below:

However, this bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term. Nonetheless, the bullish analyst sentiment indicates that the stock’s prospects in the near term look good.

Bottom Line

OM ASSET MANAGEMENT is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. While this Zacks Rank #3 stock belongs to the Zacks categorized Finance – Investment Management industry, which has marginally underperformed the broader market in the last one year – the industry ranks among the Top 40% of the Zacks industries. This hints at favorable broader prospects, alongside signaling chances of revival.



So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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