Investors interested in Financial - Investment Management stocks are likely familiar with Principal Financial (PFG) and Virtus Investment Partners (VRTS). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Principal Financial and Virtus Investment Partners have a Zacks Rank of # 1 (Strong Buy) right now. 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 only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
PFG currently has a forward P/E ratio of 7.88, while VRTS has a forward P/E of 9.07. We also note that PFG has a PEG ratio of 1.20. 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. VRTS currently has a PEG ratio of 1.81.
Another notable valuation metric for PFG is its P/B ratio of 0.77. 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, VRTS has a P/B of 1.60.
Based on these metrics and many more, PFG holds a Value grade of A, while VRTS has a Value grade of F.
Both PFG and VRTS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PFG is the superior value option right now.
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Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report
Virtus Investment Partners, Inc. (VRTS) : Free Stock Analysis Report
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