NMR or TW: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of Nomura Holdings (NMR) and Tradeweb Markets (TW). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Nomura Holdings has a Zacks Rank of #2 (Buy), while Tradeweb Markets has a Zacks Rank of #3 (Hold). This means that NMR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
NMR currently has a forward P/E ratio of 10.22, while TW has a forward P/E of 25.25. We also note that NMR has a PEG ratio of 1.13. 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. TW currently has a PEG ratio of 1.66.
Another notable valuation metric for NMR is its P/B ratio of 1.17. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TW has a P/B of 3.21.
These metrics, and several others, help NMR earn a Value grade of B, while TW has been given a Value grade of F.
NMR has seen stronger estimate revision activity and sports more attractive valuation metrics than TW, so it seems like value investors will conclude that NMR is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
