RPRX vs. BAM: Which Stock Is the Better Value Option?
Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Royalty Pharma (RPRX) and Brookfield Asset Management (BAM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Royalty Pharma has a Zacks Rank of #2 (Buy), while Brookfield Asset Management has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that RPRX likely has seen a stronger improvement to its earnings outlook than BAM has recently. 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.
RPRX currently has a forward P/E ratio of 6.48, while BAM has a forward P/E of 25.34. We also note that RPRX has a PEG ratio of 1.38. 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. BAM currently has a PEG ratio of 2.09.
Another notable valuation metric for RPRX is its P/B ratio of 1.67. 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, BAM has a P/B of 6.19.
These are just a few of the metrics contributing to RPRX's Value grade of B and BAM's Value grade of D.
RPRX 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 RPRX is likely the superior value option right now.
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Royalty Pharma PLC (RPRX) : Free Stock Analysis Report
Brookfield Asset Management Ltd. (BAM) : Free Stock Analysis Report
