Investors interested in Financial - Investment Management stocks are likely familiar with Principal Financial (PFG) and BlackRock (BLK). 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.
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.
Principal Financial has a Zacks Rank of #2 (Buy), while BlackRock has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PFG has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
PFG currently has a forward P/E ratio of 9.96, while BLK has a forward P/E of 17.13. We also note that PFG has a PEG ratio of 1.26. 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. BLK currently has a PEG ratio of 1.47.
Another notable valuation metric for PFG is its P/B ratio of 1.41. 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, BLK has a P/B of 2.36.
These are just a few of the metrics contributing to PFG's Value grade of A and BLK's Value grade of C.
PFG sticks out from BLK in both our Zacks Rank and Style Scores models, so value investors will likely feel that PFG is the better 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 Principal Financial Group, Inc. (PFG): Free Stock Analysis Report BlackRock, Inc. (BLK): Free Stock Analysis Report To read this article on Zacks.com click here.