Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of BGC Group (BGC) and Robinhood Markets, Inc. (HOOD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, both BGC Group and Robinhood Markets, Inc. are sporting a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BGC currently has a forward P/E ratio of 7.91, while HOOD has a forward P/E of 28.20. We also note that BGC has a PEG ratio of 0.33. 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. HOOD currently has a PEG ratio of 2.01.
Another notable valuation metric for BGC is its P/B ratio of 4.10. 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, HOOD has a P/B of 4.66.
These are just a few of the metrics contributing to BGC's Value grade of B and HOOD's Value grade of F.
Both BGC and HOOD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BGC is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BGC Group, Inc. (BGC) : Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Comments