Investors interested in Financial - Investment Management stocks are likely familiar with Federated Investors (FII) 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.
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 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.
Federated Investors and Hargreaves Lansdown plc are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that FII likely has seen a stronger improvement to its earnings outlook than HRGLY has recently. But this is only part of the picture for value investors.
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.
FII currently has a forward P/E ratio of 10.67, while HRGLY has a forward P/E of 31.97. We also note that FII has a PEG ratio of 1.61. 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 2.62.
Another notable valuation metric for FII is its P/B ratio of 3.13. 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, HRGLY has a P/B of 20.42.
Based on these metrics and many more, FII holds a Value grade of A, while HRGLY has a Value grade of F.
FII sticks out from HRGLY in both our Zacks Rank and Style Scores models, so value investors will likely feel that FII is the better option right now.
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Federated Investors, Inc. (FII) : Free Stock Analysis Report
Hargreaves Lansdown plc (HRGLY) : Free Stock Analysis Report
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