AMG vs. BLK: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial - Investment Management sector might want to consider either Affiliated Managers Group (AMG) or BlackRock (BLK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Affiliated Managers Group and BlackRock are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AMG likely has seen a stronger improvement to its earnings outlook than BLK has recently. But this is only part of the picture for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AMG currently has a forward P/E ratio of 9.83, while BLK has a forward P/E of 20.19. We also note that AMG has a PEG ratio of 0.49. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BLK currently has a PEG ratio of 1.24.
Another notable valuation metric for AMG is its P/B ratio of 2.42. 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, BLK has a P/B of 3.02.
These metrics, and several others, help AMG earn a Value grade of B, while BLK has been given a Value grade of D.
AMG 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 AMG is likely the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
