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 presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Federated Hermes and Apollo Global Management Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that FHI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
FHI currently has a forward P/E ratio of 8.74, while APO has a forward P/E of 14.30. We also note that FHI has a PEG ratio of 0.77. 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. APO currently has a PEG ratio of 0.89.
Another notable valuation metric for FHI is its P/B ratio of 2.40. 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 2.64.
These are just a few of the metrics contributing to FHI's Value grade of A and APO's Value grade of C.
FHI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FHI is likely the superior value option right now.
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Free: See Our Top Stock And 4 Runners UpFederated 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.
