Investors interested in Financial - Investment Management stocks are likely familiar with Victory Capital Holdings (VCTR) and Eaton Vance . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Victory Capital Holdings has 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 VCTR has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
VCTR currently has a forward P/E ratio of 5.58, while EV has a forward P/E of 13.20. We also note that VCTR has a PEG ratio of 0.14. 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. EV currently has a PEG ratio of 1.97.
Another notable valuation metric for VCTR is its P/B ratio of 2.94. 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 4.53.
These are just a few of the metrics contributing to VCTR's Value grade of A and EV's Value grade of C.
VCTR sticks out from EV in both our Zacks Rank and Style Scores models, so value investors will likely feel that VCTR is the better option right now.