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SCHW vs. HOOD: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of The Charles Schwab Corporation (SCHW - Free Report) and Robinhood Markets, Inc. (HOOD - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, The Charles Schwab Corporation has a Zacks Rank of #2 (Buy), while Robinhood Markets, Inc. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SCHW 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SCHW currently has a forward P/E ratio of 17.80, while HOOD has a forward P/E of 43.12. We also note that SCHW has a PEG ratio of 0.83. 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. HOOD currently has a PEG ratio of 1.67.
Another notable valuation metric for SCHW is its P/B ratio of 4.35. 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, HOOD has a P/B of 11.22.
These metrics, and several others, help SCHW earn a Value grade of B, while HOOD has been given a Value grade of D.
SCHW 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 SCHW is likely the superior value option right now.
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SCHW vs. HOOD: Which Stock Is the Better Value Option?
Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of The Charles Schwab Corporation (SCHW - Free Report) and Robinhood Markets, Inc. (HOOD - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, The Charles Schwab Corporation has a Zacks Rank of #2 (Buy), while Robinhood Markets, Inc. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SCHW 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SCHW currently has a forward P/E ratio of 17.80, while HOOD has a forward P/E of 43.12. We also note that SCHW has a PEG ratio of 0.83. 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. HOOD currently has a PEG ratio of 1.67.
Another notable valuation metric for SCHW is its P/B ratio of 4.35. 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, HOOD has a P/B of 11.22.
These metrics, and several others, help SCHW earn a Value grade of B, while HOOD has been given a Value grade of D.
SCHW 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 SCHW is likely the superior value option right now.