Investors looking for stocks in the Financial - Investment Bank sector might want to consider either Morgan Stanley (MS) or Ladenburg Thalmann (LTS). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Morgan Stanley has a Zacks Rank of #2 (Buy), while Ladenburg Thalmann has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MS has an improving earnings outlook. 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.
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.
MS currently has a forward P/E ratio of 8.67, while LTS has a forward P/E of 68.80. We also note that MS has a PEG ratio of 0.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LTS currently has a PEG ratio of 4.59.
Another notable valuation metric for MS is its P/B ratio of 0.98. 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, LTS has a P/B of 2.01.
These metrics, and several others, help MS earn a Value grade of A, while LTS has been given a Value grade of D.
MS sticks out from LTS in both our Zacks Rank and Style Scores models, so value investors will likely feel that MS is the better option right now.
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Morgan Stanley (MS) : Free Stock Analysis Report
Ladenburg Thalmann Financial Services Inc (LTS) : Free Stock Analysis Report
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