IX or OCSL: Which Is the Better Value Stock Right Now?
Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Orix (IX) and Oaktree Specialty Lending (OCSL). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Orix and Oaktree Specialty Lending are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that IX likely has seen a stronger improvement to its earnings outlook than OCSL has recently. But this is just one piece of the puzzle 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.
IX currently has a forward P/E ratio of 5.69, while OCSL has a forward P/E of 10.46. We also note that IX has a PEG ratio of 0.79. 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. OCSL currently has a PEG ratio of 5.23.
Another notable valuation metric for IX is its P/B ratio of 0.66. 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, OCSL has a P/B of 0.77.
Based on these metrics and many more, IX holds a Value grade of A, while OCSL has a Value grade of D.
IX sticks out from OCSL in both our Zacks Rank and Style Scores models, so value investors will likely feel that IX is the better option right now.
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