HLI vs. MCO: Which Stock Should Value Investors Buy Now?
Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Houlihan Lokey (HLI) and Moody's (MCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Right now, Houlihan Lokey is sporting a Zacks Rank of #2 (Buy), while Moody's has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HLI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
HLI currently has a forward P/E ratio of 13.70, while MCO has a forward P/E of 18.72. We also note that HLI has a PEG ratio of 1.15. 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. MCO currently has a PEG ratio of 1.74.
Another notable valuation metric for HLI is its P/B ratio of 2.95. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MCO has a P/B of 44.70.
Based on these metrics and many more, HLI holds a Value grade of A, while MCO has a Value grade of F.
HLI stands above MCO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HLI is the superior value option right now.
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Houlihan Lokey, Inc. (HLI) : Free Stock Analysis Report
Moody's Corporation (MCO) : Free Stock Analysis Report
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