Investors looking for stocks in the Financial - Investment Management sector might want to consider either AllianceBernstein (AB - Free Report) or Hargreaves Lansdown plc (HRGLY - 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.
AllianceBernstein and Hargreaves Lansdown plc are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AB has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AB currently has a forward P/E ratio of 10.79, while HRGLY has a forward P/E of 33.63. We also note that AB has a PEG ratio of 1.52. 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. HRGLY currently has a PEG ratio of 2.53.
Another notable valuation metric for AB is its P/B ratio of 1.81. 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, HRGLY has a P/B of 21.48.
These metrics, and several others, help AB earn a Value grade of A, while HRGLY has been given a Value grade of F.
AB has seen stronger estimate revision activity and sports more attractive valuation metrics than HRGLY, so it seems like value investors will conclude that AB is the superior option right now.