U.S. Markets closed

GL vs. VIRT: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Torchmark (GL) and Virtu Financial (VIRT). 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Torchmark is sporting a Zacks Rank of #2 (Buy), while Virtu Financial has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GL has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

GL currently has a forward P/E ratio of 12.94, while VIRT has a forward P/E of 14.52. We also note that GL has a PEG ratio of 1.70. 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. VIRT currently has a PEG ratio of 2.90.

Another notable valuation metric for GL is its P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, VIRT has a P/B of 2.54.

These metrics, and several others, help GL earn a Value grade of B, while VIRT has been given a Value grade of D.

GL sticks out from VIRT in both our Zacks Rank and Style Scores models, so value investors will likely feel that GL is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Torchmark Corporation (GL) : Free Stock Analysis Report
 
Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research