Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Ares Management (ARES) and Hargreaves Lansdown plc (HRGLY). 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.
Right now, Ares Management is sporting a Zacks Rank of #2 (Buy), while Hargreaves Lansdown plc has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ARES is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
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.
ARES currently has a forward P/E ratio of 15.10, while HRGLY has a forward P/E of 40.63. We also note that ARES has a PEG ratio of 1.27. 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. HRGLY currently has a PEG ratio of 3.33.
Another notable valuation metric for ARES is its P/B ratio of 2.19. 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, HRGLY has a P/B of 23.83.
Based on these metrics and many more, ARES holds a Value grade of A, while HRGLY has a Value grade of F.
ARES sticks out from HRGLY in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARES is the better option right now.
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Ares Management L.P. (ARES) : Free Stock Analysis Report
Hargreaves Lansdown plc (HRGLY) : Free Stock Analysis Report
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