Investors with an interest in Financial - Investment Management stocks have likely encountered both Legg Mason (LM - Free Report) and Oaktree Capital Group, LLC . 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.
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 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, both Legg Mason and Oaktree Capital Group, LLC are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
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.
LM currently has a forward P/E ratio of 11.85, while OAK has a forward P/E of 14.72. We also note that LM has a PEG ratio of 0.73. 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. OAK currently has a PEG ratio of 1.38.
Another notable valuation metric for LM is its P/B ratio of 0.78. 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, OAK has a P/B of 3.79.
These metrics, and several others, help LM earn a Value grade of A, while OAK has been given a Value grade of D.
Both LM and OAK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LM is the superior value option right now.