BEN or FII: Which Is the Better Value Stock Right Now?
Investors interested in Financial - Investment Management stocks are likely familiar with Franklin Resources (BEN) and Federated Investors (FII). 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.
Franklin Resources has a Zacks Rank of #2 (Buy), while Federated Investors has a Zacks Rank of #3 (Hold) right now. This means that BEN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BEN currently has a forward P/E ratio of 12.98, while FII has a forward P/E of 13.56. We also note that BEN has a PEG ratio of 1.85. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FII currently has a PEG ratio of 1.98.
Another notable valuation metric for BEN is its P/B ratio of 1.61. 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, FII has a P/B of 3.66.
These are just a few of the metrics contributing to BEN's Value grade of A and FII's Value grade of C.
BEN sticks out from FII in both our Zacks Rank and Style Scores models, so value investors will likely feel that BEN is the better option right now.
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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.