Investors interested in Financial - Investment Bank stocks are likely familiar with Evercore (EVR) and TD Ameritrade (AMTD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Evercore has a Zacks Rank of #2 (Buy), while TD Ameritrade has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EVR has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
EVR currently has a forward P/E ratio of 11.16, while AMTD has a forward P/E of 13.54. We also note that EVR has a PEG ratio of 0.71. 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. AMTD currently has a PEG ratio of 0.82.
Another notable valuation metric for EVR is its P/B ratio of 3.65. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AMTD has a P/B of 3.67.
These metrics, and several others, help EVR earn a Value grade of A, while AMTD has been given a Value grade of C.
EVR 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 EVR is likely the superior value option right now.
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