Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Federated Hermes (FHI) and SEI Investments (SEIC). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Federated Hermes and SEI Investments are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FHI has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
FHI currently has a forward P/E ratio of 10.35, while SEIC has a forward P/E of 14.82. We also note that FHI has a PEG ratio of 0.53. 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. SEIC currently has a PEG ratio of 1.23.
Another notable valuation metric for FHI is its P/B ratio of 3.35. 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, SEIC has a P/B of 4.22.
These metrics, and several others, help FHI earn a Value grade of B, while SEIC has been given a Value grade of C.
FHI stands above SEIC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FHI is the superior value option right now.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
See "2nd Wave" AI stocks now >>Federated Hermes, Inc. (FHI) : Free Stock Analysis Report
SEI Investments Company (SEIC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
