Investors looking for stocks in the Financial - Investment Management sector might want to consider either Invesco (IVZ) or Carlyle Group (CG). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Invesco has a Zacks Rank of #1 (Strong Buy), while Carlyle Group has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IVZ has an improving earnings outlook. But this is only part of the picture 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.
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.
IVZ currently has a forward P/E ratio of 10.48, while CG has a forward P/E of 12.24. We also note that IVZ has a PEG ratio of 0.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CG currently has a PEG ratio of 1.59.
Another notable valuation metric for IVZ is its P/B ratio of 0.97. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CG has a P/B of 2.22.
Based on these metrics and many more, IVZ holds a Value grade of B, while CG has a Value grade of D.
IVZ stands above CG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IVZ is the superior value option right now.
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