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Does Artisan Partners Offer a Good Value Buying Opportunity?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn't want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let's put Artisan Partners Asset Management Inc.APAM stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock's current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Artisan Partners has a trailing twelve months PE ratio of 14.52, as you can see in the chart below:

This level actually compares pretty favorably with the market at large as well, as the PE for the S&P 500 stands at about 19.88. If we focus on the PE trend, Artisan Partners' current PE level is sitting right at its midpoint over the last three years. This indicates that the stock is currently reasonably priced, as far as its historical trend is concerned.

We should also point out that Artisan Partners has a forward PE ratio (price relative to this year's earnings) of 14.24, so it is fair to say that a slightly more value-oriented path may be ahead for Artisan Partners stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock's price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Artisan Partners has a P/S ratio of about 1.76. This is considerably lower than the S&P 500 average, which comes in at 3.25 right now. Also, as we can see in the chart below, this is way below the highs for this stock in particular over the past few years. This suggests that the stock is somewhat undervalued at current levels.

Artisan Partners Asset Management Inc. Price and Consensus | Artisan Partners Asset Management Inc. Quote

The stock holds a Zacks Rank #3 (Hold), which indicates expectations of an in-line performance from the company in the near term. However, as indicated by the negative estimate revisions, Artisan Partners is witnessing negative analyst sentiment at present which doesn't work in the company's favor.

Bottom Line

Artisan Partners is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 45% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks categorized Finance-Investment Management industry has clearly underperformed the broader market, as you can see below:

So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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