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AB vs. BLK: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2 min read
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Investors with an interest in Financial - Investment Management stocks have likely encountered both AllianceBernstein (AB) and BlackRock (BLK). 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, AllianceBernstein is sporting a Zacks Rank of #2 (Buy), while BlackRock has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AB likely has seen a stronger improvement to its earnings outlook than BLK has recently. However, value investors will care about much more than just this.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AB currently has a forward P/E ratio of 10.94, while BLK has a forward P/E of 20.15. We also note that AB has a PEG ratio of 1.63. 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. BLK currently has a PEG ratio of 2.02.

Another notable valuation metric for AB is its P/B ratio of 1.85. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BLK has a P/B of 2.74.

Based on these metrics and many more, AB holds a Value grade of A, while BLK has a Value grade of C.

AB sticks out from BLK in both our Zacks Rank and Style Scores models, so value investors will likely feel that AB is the better option right now.


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AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
 
BlackRock, Inc. (BLK) : Free Stock Analysis Report
 
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