Investors interested in Financial - Investment Management stocks are likely familiar with Artisan Partners Asset Management (APAM - Free Report) and Hargreaves Lansdown plc (HRGLY - Free Report) . 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Artisan Partners Asset Management has a Zacks Rank of #2 (Buy), while Hargreaves Lansdown plc has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that APAM likely has seen a stronger improvement to its earnings outlook than HRGLY has recently. However, value investors will care about much more than just this.
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.
APAM currently has a forward P/E ratio of 12.15, while HRGLY has a forward P/E of 38.26. We also note that APAM has a PEG ratio of 1.10. 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. HRGLY currently has a PEG ratio of 3.16.
Another notable valuation metric for APAM is its P/B ratio of 20.29. 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 22.21.
Based on these metrics and many more, APAM holds a Value grade of A, while HRGLY has a Value grade of F.
APAM has seen stronger estimate revision activity and sports more attractive valuation metrics than HRGLY, so it seems like value investors will conclude that APAM is the superior option right now.