AMG vs. ARES: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Affiliated Managers Group (AMG) and Ares Management (ARES). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Affiliated Managers Group has a Zacks Rank of #2 (Buy), while Ares Management has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AMG likely has seen a stronger improvement to its earnings outlook than ARES has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AMG currently has a forward P/E ratio of 8.96, while ARES has a forward P/E of 24.62. We also note that AMG has a PEG ratio of 0.56. 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. ARES currently has a PEG ratio of 1.44.
Another notable valuation metric for AMG is its P/B ratio of 1.98. 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, ARES has a P/B of 6.47.
Based on these metrics and many more, AMG holds a Value grade of A, while ARES has a Value grade of D.
AMG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AMG is likely the superior value option right now.
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Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report
Ares Management Corporation (ARES) : Free Stock Analysis Report
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