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AB vs. TROW: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors looking for stocks in the Financial - Investment Management sector might want to consider either AllianceBernstein (AB) or T. Rowe Price (TROW). 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.

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.

AllianceBernstein and T. Rowe Price are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AB likely has seen a stronger improvement to its earnings outlook than TROW has recently. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

AB currently has a forward P/E ratio of 11.86, while TROW has a forward P/E of 15.85. We also note that AB has a PEG ratio of 1.33. 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. TROW currently has a PEG ratio of 1.66.

Another notable valuation metric for AB is its P/B ratio of 2.06. 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, TROW has a P/B of 4.57.

These are just a few of the metrics contributing to AB's Value grade of B and TROW's Value grade of C.

AB has seen stronger estimate revision activity and sports more attractive valuation metrics than TROW, 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
 
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
 
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Zacks Investment Research