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BEN vs. HRGLY: Which Stock Is the Better Value Option?

Zacks Equity Research
1st Constitution Bancorp (FCCY) delivered earnings and revenue surprises of 5.13% and 0.92%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

Investors interested in Financial - Investment Management stocks are likely familiar with Franklin Resources (BEN) and Hargreaves Lansdown plc (HRGLY). But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Franklin Resources has a Zacks Rank of #1 (Strong Buy), while Hargreaves Lansdown plc has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BEN likely has seen a stronger improvement to its earnings outlook than HRGLY has recently. But this is just one factor that value investors are interested in.

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 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.

BEN currently has a forward P/E ratio of 13.06, while HRGLY has a forward P/E of 44.04. We also note that BEN has a PEG ratio of 1.87. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HRGLY currently has a PEG ratio of 3.64.

Another notable valuation metric for BEN is its P/B ratio of 1.63. 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 25.45.

Based on these metrics and many more, BEN holds a Value grade of A, while HRGLY has a Value grade of D.

BEN 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 BEN is likely the superior value option right now.


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Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
 
Hargreaves Lansdown plc (HRGLY) : Free Stock Analysis Report
 
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