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Mast Global Battery Recycling & Production ETF (EV) - free report >>
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LM vs. EV: Which Stock Is the Better Value Option?
Investors with an interest in Financial - Investment Management stocks have likely encountered both Legg Mason and Eaton Vance (EV - 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Legg Mason is sporting a Zacks Rank of #2 (Buy), while Eaton Vance 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 LM has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
LM currently has a forward P/E ratio of 9.89, while EV has a forward P/E of 13.27. We also note that LM has a PEG ratio of 0.78. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EV currently has a PEG ratio of 2.94.
Another notable valuation metric for LM is its P/B ratio of 0.83. 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, EV has a P/B of 4.54.
Based on these metrics and many more, LM holds a Value grade of A, while EV has a Value grade of C.
LM has seen stronger estimate revision activity and sports more attractive valuation metrics than EV, so it seems like value investors will conclude that LM is the superior option right now.