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LU vs. MCO: Which Stock Should Value Investors Buy Now?

·2 min read

Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Lufax Holding Ltd. Sponsored ADR (LU) and Moody's (MCO). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Lufax Holding Ltd. Sponsored ADR has a Zacks Rank of #2 (Buy), while Moody's has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LU is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

LU currently has a forward P/E ratio of 3.67, while MCO has a forward P/E of 24.65. We also note that LU has a PEG ratio of 0.23. 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. MCO currently has a PEG ratio of 2.24.

Another notable valuation metric for LU is its P/B ratio of 0.75. 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 19.21.

Based on these metrics and many more, LU holds a Value grade of B, while MCO has a Value grade of C.

LU is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that LU is likely the superior value option right now.


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Lufax Holding Ltd. Sponsored ADR (LU) : Free Stock Analysis Report
 
Moody's Corporation (MCO) : Free Stock Analysis Report
 
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