Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Principal Financial (PFG) and Blackstone Group (NYSE:BX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Principal Financial has a Zacks Rank of #2 (Buy), while Blackstone Group has a Zacks Rank of #4 (Sell). This means that PFG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
PFG currently has a forward P/E ratio of 9.62, while BX has a forward P/E of 13.80. We also note that PFG has a PEG ratio of 2.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BX currently has a PEG ratio of 3.46.
Another notable valuation metric for PFG is its P/B ratio of 1.29. 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, BX has a P/B of 1.69.
Based on these metrics and many more, PFG holds a Value grade of B, while BX has a Value grade of D.
PFG has seen stronger estimate revision activity and sports more attractive valuation metrics than BX, so it seems like value investors will conclude that PFG is the superior option right now.
Principal Financial Group, Inc. (NASDAQ:PFG
The Blackstone Group L.P. (BX): Free Stock Analysis Report
Original post