Does Artisan Partners Offer a Good Value Buying Opportunity?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Artisan Partners Asset Management Inc. APAM stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Artisan Partners has a trailing twelve months PE ratio of 14.52, as you can see in the chart below:

This level actually compares pretty favorably with the market at large as well, as the PE for the S&P 500 stands at about 19.88. If we focus on the PE trend, Artisan Partners’ current PE level is sitting right at its midpoint over the last three years. This indicates that the stock is currently reasonably priced, as far as its historical trend is concerned.

Further, the stock’s PE also compares favorably with the Zacks classified Finance-Investment Management industry’s trailing twelve months PE ratio, which stands at 15.43. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Artisan Partners has a forward PE ratio (price relative to this year’s earnings) of 14.24, so it is fair to say that a slightly more value-oriented path may be ahead for Artisan Partners stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Artisan Partners has a P/S ratio of about 1.76. This is considerably lower than the S&P 500 average, which comes in at 3.25 right now. Also, as we can see in the chart below, this is way below the highs for this stock in particular over the past few years. This suggests that the stock is somewhat undervalued at current levels.

Broad Value Outlook

In aggregateArtisan Partners currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Artisan Partners a decent choice for value investors.

What About the Stock Overall?

Though Artisan Partners might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives APAM a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been mixed at best. Notably, the current quarter has seen one estimate go lower in the last sixty days with no upward revisions registered during the same time period. Similarly, the current year estimate has seen two upward revisions and one downward revision over the same time frame.

This has had a negative impact on the consensus estimate as the current quarter consensus estimate has declined lower by 7.7% in the last sixty days, while the current year consensus estimate has declined lower by 2.8% over the same time frame.

You can see the consensus estimate trend and recent price action for the stock in the chart below:

Artisan Partners Asset Management Inc. Price and Consensus

Artisan Partners Asset Management Inc. Price and Consensus | Artisan Partners Asset Management Inc. Quote

The stock holds a Zacks Rank #3 (Hold), which indicates expectations of an in-line performance from the company in the near term. However, as indicated by the negative estimate revisions, Artisan Partners is witnessing negative analyst sentiment at present which doesn’t work in the company’s favor.

Bottom Line

Artisan Partners is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 45% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks categorized Finance-Investment Management industry has clearly underperformed the broader market, as you can see below:

So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.

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