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ARES vs. TROW: Which Stock Is the Better Value Option?

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Investors interested in Financial - Investment Management stocks are likely familiar with Ares Management (ARES - Free Report) and T. Rowe Price (TROW - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Ares Management has a Zacks Rank of #1 (Strong Buy), while T. Rowe Price 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 ARES is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

ARES currently has a forward P/E ratio of 15.05, while TROW has a forward P/E of 15.62. We also note that ARES has a PEG ratio of 1.17. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TROW currently has a PEG ratio of 1.87.

Another notable valuation metric for ARES is its P/B ratio of 2.17. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TROW has a P/B of 3.93.

Based on these metrics and many more, ARES holds a Value grade of A, while TROW has a Value grade of D.

ARES 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 ARES is likely the superior value option right now.


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T. Rowe Price Group, Inc. (TROW) - free report >>

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