Investors looking for stocks in the Financial - Investment Management sector might want to consider either Legg Mason (LM) or Oaktree Capital Group, LLC (OAK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, both Legg Mason and Oaktree Capital Group, LLC are sporting a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
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.
LM currently has a forward P/E ratio of 11.68, while OAK has a forward P/E of 14.28. We also note that LM has a PEG ratio of 0.72. 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. OAK currently has a PEG ratio of 2.23.
Another notable valuation metric for LM is its P/B ratio of 0.89. 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, OAK has a P/B of 3.79.
These metrics, and several others, help LM earn a Value grade of B, while OAK has been given a Value grade of C.
Both LM and OAK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LM is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Legg Mason, Inc. (LM) : Free Stock Analysis Report
Oaktree Capital Group, LLC (OAK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research