Investors interested in Financial - Investment Bank stocks are likely familiar with TD Ameritrade (NASDAQ:AMTD) and Tradeweb Markets (NASDAQ:TW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, TD Ameritrade is sporting a Zacks Rank of #1 (Strong Buy), while Tradeweb Markets has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AMTD 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.
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.
AMTD currently has a forward P/E ratio of 11.37, while TW has a forward P/E of 43.60. We also note that AMTD has a PEG ratio of 1.51. 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. TW currently has a PEG ratio of 1.99.
Another notable valuation metric for AMTD is its P/B ratio of 2.15. 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, TW has a P/B of 2.65.
These metrics, and several others, help AMTD earn a Value grade of A, while TW has been given a Value grade of F.
AMTD stands above TW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMTD is the superior value option right now.
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TD Ameritrade Holding Corporation (AMTD): Free Stock Analysis Report
Tradeweb Markets Inc. (TW): Free Stock Analysis Report
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