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LM vs. APO: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Financial - Investment Management sector might want to consider either Legg Mason (LM) or Apollo Global Management, LLC (APO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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, Legg Mason has a Zacks Rank of #2 (Buy), while Apollo Global Management, LLC has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LM likely has seen a stronger improvement to its earnings outlook than APO has recently. But this is just one piece of the puzzle for value investors.

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 10.76, while APO has a forward P/E of 17.90. We also note that LM has a PEG ratio of 0.81. 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. APO currently has a PEG ratio of 1.30.

Another notable valuation metric for LM is its P/B ratio of 0.91. 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, APO has a P/B of 4.93.

These are just a few of the metrics contributing to LM's Value grade of A and APO's Value grade of C.

LM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LM is likely the superior value option right now.


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