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LM or APO: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Legg Mason (LM) or Apollo Global Management, LLC (APO). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Legg Mason is sporting a Zacks Rank of #2 (Buy), while Apollo Global Management, LLC has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LM has an improving earnings outlook. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

LM currently has a forward P/E ratio of 9.81, while APO has a forward P/E of 17.57. We also note that LM has a PEG ratio of 0.77. 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. APO currently has a PEG ratio of 1.25.

Another notable valuation metric for LM is its P/B ratio of 0.83. 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, APO has a P/B of 4.85.

These metrics, and several others, help LM earn a Value grade of A, while APO has been given a Value grade of C.

LM stands above APO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LM is the superior value option right now.


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