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Are Investors Undervaluing BGC Partners (BGCP) Right Now?

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·3 min read
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is BGC Partners (BGCP). BGCP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors should also recognize that BGCP has a P/B ratio of 1.18. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.22. Over the past 12 months, BGCP's P/B has been as high as 2.85 and as low as 1.03, with a median of 2.24.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BGCP has a P/S ratio of 0.42. This compares to its industry's average P/S of 1.07.

Finally, our model also underscores that BGCP has a P/CF ratio of 5.09. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. BGCP's P/CF compares to its industry's average P/CF of 17.19. BGCP's P/CF has been as high as 26.01 and as low as 4.42, with a median of 11.69, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that BGC Partners is likely undervalued currently. And when considering the strength of its earnings outlook, BGCP sticks out at as one of the market's strongest value stocks.


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