AB vs. BX: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Financial - Investment Management sector have probably already heard of AllianceBernstein (AB) and Blackstone Group (BX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
AllianceBernstein has a Zacks Rank of #2 (Buy), while Blackstone Group 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 AB has an improving earnings outlook. But this is just one piece of the puzzle 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AB currently has a forward P/E ratio of 10.89, while BX has a forward P/E of 26.53. We also note that AB has a PEG ratio of 1.62. 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. BX currently has a PEG ratio of 13.53.
Another notable valuation metric for AB is its P/B ratio of 1.87. 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, BX has a P/B of 3.12.
These metrics, and several others, help AB earn a Value grade of A, while BX has been given a Value grade of D.
AB 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 AB is likely the superior value option right now.
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AllianceBernstein Holding L.P. (AB): Free Stock Analysis Report
Blackstone Group IncThe (BX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.