Investors interested in Financial - Investment Management stocks are likely familiar with Federated Hermes (FHI) and Apollo Global Management Inc. (APO). 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.
Federated Hermes and Apollo Global Management Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FHI is likely seeing its earnings outlook improve to a greater extent. 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 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.
FHI currently has a forward P/E ratio of 12.44, while APO has a forward P/E of 20.88. We also note that FHI has a PEG ratio of 1.37. 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. APO currently has a PEG ratio of 1.51.
Another notable valuation metric for FHI is its P/B ratio of 3.07. 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, APO has a P/B of 3.08.
Based on these metrics and many more, FHI holds a Value grade of A, while APO has a Value grade of C.
FHI has seen stronger estimate revision activity and sports more attractive valuation metrics than APO, so it seems like value investors will conclude that FHI is the superior option right now.
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Today, See These 5 Potential Home Runs >>Federated Hermes, Inc. (FHI) : Free Stock Analysis Report
Apollo Global Management Inc. (APO) : 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.
