Investors with an interest in Financial - Investment Bank stocks have likely encountered both Goldman Sachs (GS) and Tradeweb Markets (TW). But which of these two stocks presents investors with the better value opportunity right now? Let's 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, Goldman Sachs is sporting a Zacks Rank of #2 (Buy), while Tradeweb Markets 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 GS is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GS currently has a forward P/E ratio of 9.64, while TW has a forward P/E of 41.69. We also note that GS has a PEG ratio of 0.80. 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. TW currently has a PEG ratio of 4.90.
Another notable valuation metric for GS is its P/B ratio of 0.99. 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, TW has a P/B of 1.95.
Based on these metrics and many more, GS holds a Value grade of A, while TW has a Value grade of D.
GS has seen stronger estimate revision activity and sports more attractive valuation metrics than TW, so it seems like value investors will conclude that GS is the superior option right now.
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The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
Tradeweb Markets Inc. (TW) : Free Stock Analysis Report
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