Investors interested in Financial - Investment Management stocks are likely familiar with AllianceBernstein (AB) and HARGREAVES LNSD (HRGLY). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, AllianceBernstein is sporting a Zacks Rank of #2 (Buy), while HARGREAVES LNSD has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AB has an improving earnings outlook. But this is only part of the picture 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.
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.
AB currently has a forward P/E ratio of 11.64, while HRGLY has a forward P/E of 36.75. We also note that AB has a PEG ratio of 1.64. 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. HRGLY currently has a PEG ratio of 2.76.
Another notable valuation metric for AB is its P/B ratio of 1.93. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HRGLY has a P/B of 29.78.
These metrics, and several others, help AB earn a Value grade of A, while HRGLY has been given a Value grade of F.
AB has seen stronger estimate revision activity and sports more attractive valuation metrics than HRGLY, so it seems like value investors will conclude that AB is the superior option right now.
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AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
HARGREAVES LNSD (HRGLY) : Free Stock Analysis Report
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