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AMG vs. FOCS: 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 Affiliated Managers Group (AMG) or Focus Financial Partners Inc. (FOCS). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Affiliated Managers Group and Focus Financial Partners Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AMG is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

AMG currently has a forward P/E ratio of 7.90, while FOCS has a forward P/E of 14.81. We also note that AMG has a PEG ratio of 0.53. 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. FOCS currently has a PEG ratio of 0.91.

Another notable valuation metric for AMG is its P/B ratio of 1.53. 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, FOCS has a P/B of 4.32.

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

AMG sticks out from FOCS 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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Zacks Investment Research