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EV vs. ARES: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Eaton Vance (EV) and Ares Management (ARES). 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.

Currently, Eaton Vance has a Zacks Rank of #2 (Buy), while Ares Management 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 EV is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

EV currently has a forward P/E ratio of 12.07, while ARES has a forward P/E of 23.94. We also note that EV 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. ARES currently has a PEG ratio of 3.19.

Another notable valuation metric for EV is its P/B ratio of 3.40. 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 5.84.

These are just a few of the metrics contributing to EV's Value grade of A and ARES's Value grade of F.

EV has seen stronger estimate revision activity and sports more attractive valuation metrics than ARES, so it seems like value investors will conclude that EV is the superior option right now.


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Eaton Vance Corporation (EV) : Free Stock Analysis Report
 
Ares Management L.P. (ARES) : Free Stock Analysis Report
 
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