Investors interested in Financial - Investment Management stocks are likely familiar with Invesco (IVZ - Free Report) and Virtus Investment Partners (VRTS - 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.
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, Invesco has a Zacks Rank of #2 (Buy), while Virtus Investment Partners has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IVZ has an improving earnings 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
IVZ currently has a forward P/E ratio of 6.49, while VRTS has a forward P/E of 7.30. We also note that IVZ has a PEG ratio of 0.78. 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. VRTS currently has a PEG ratio of 1.17.
Another notable valuation metric for IVZ is its P/B ratio of 0.73. 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, VRTS has a P/B of 1.27.
These metrics, and several others, help IVZ earn a Value grade of A, while VRTS has been given a Value grade of D.
IVZ has seen stronger estimate revision activity and sports more attractive valuation metrics than VRTS, so it seems like value investors will conclude that IVZ is the superior option right now.