Investors with an interest in Financial - Investment Management stocks have likely encountered both Principal Financial (PFG) 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Principal Financial has a Zacks Rank of #2 (Buy), while Oaktree Capital Group, LLC has a Zacks Rank of #3 (Hold). This means that PFG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
PFG currently has a forward P/E ratio of 9.72, while OAK has a forward P/E of 15.28. We also note that PFG has a PEG ratio of 1.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. OAK currently has a PEG ratio of 2.55.
Another notable valuation metric for PFG is its P/B ratio of 1.12. 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 4.24.
Based on these metrics and many more, PFG holds a Value grade of A, while OAK has a Value grade of F.
PFG stands above OAK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PFG is the superior value option right now.