AGM or UWMC: Which Is the Better Value Stock Right Now?
Investors interested in Financial - Mortgage & Related Services stocks are likely familiar with Federal Agricultural Mortgage (AGM) and UWM Holdings Corporation (UWMC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Federal Agricultural Mortgage is sporting a Zacks Rank of #2 (Buy), while UWM Holdings Corporation 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 AGM 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 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.
AGM currently has a forward P/E ratio of 10.87, while UWMC has a forward P/E of 16.63. We also note that AGM has a PEG ratio of 0.84. 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. UWMC currently has a PEG ratio of 2.38.
Another notable valuation metric for AGM is its P/B ratio of 1.96. 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, UWMC has a P/B of 2.17.
Based on these metrics and many more, AGM holds a Value grade of B, while UWMC has a Value grade of D.
AGM 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 AGM is likely the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
