Investors interested in Financial - Investment Management stocks are likely familiar with Federated Hermes (FHI) and Apollo Global Management, LLC (APO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, Federated Hermes is sporting a Zacks Rank of #2 (Buy), while Apollo Global Management, LLC has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FHI likely has seen a stronger improvement to its earnings outlook than APO has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
FHI currently has a forward P/E ratio of 8.95, while APO has a forward P/E of 24.70. We also note that FHI has a PEG ratio of 0.90. 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. APO currently has a PEG ratio of 1.45.
Another notable valuation metric for FHI is its P/B ratio of 2.29. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, APO has a P/B of 2.84.
These are just a few of the metrics contributing to FHI's Value grade of A and APO's Value grade of C.
FHI stands above APO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FHI is the superior value option right now.
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Federated Hermes, Inc. (FHI): Free Stock Analysis Report
Apollo Global Management, LLC (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.