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AMG or TROW: Which Is the Better Value Stock Right Now?

·2 min read

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Affiliated Managers Group (AMG) or T. Rowe Price (TROW). But which of these two companies is the best option for those looking for undervalued stocks? 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.

Affiliated Managers Group and T. Rowe Price are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that AMG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

AMG currently has a forward P/E ratio of 8.94, while TROW has a forward P/E of 15.06. We also note that AMG has a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TROW currently has a PEG ratio of 1.67.

Another notable valuation metric for AMG is its P/B ratio of 2.02. 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, TROW has a P/B of 5.59.

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

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


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Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report
 
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
 
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