In This Article:
Investors interested in stocks from the Financial - Investment Management sector have probably already heard of AllianceBernstein (AB) and Carlyle Group (CG). But which of these two stocks presents investors with the better value opportunity right now? 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, AllianceBernstein has a Zacks Rank of #2 (Buy), while Carlyle Group has a Zacks Rank of #3 (Hold). This means that AB's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
AB currently has a forward P/E ratio of 10.69, while CG has a forward P/E of 10.81. We also note that AB has a PEG ratio of 0.84. 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. CG currently has a PEG ratio of 1.07.
Another notable valuation metric for AB is its P/B ratio of 2.09. 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, CG has a P/B of 2.60.
These metrics, and several others, help AB earn a Value grade of B, while CG has been given a Value grade of C.
AB has seen stronger estimate revision activity and sports more attractive valuation metrics than CG, so it seems like value investors will conclude that AB is the superior 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
AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
Carlyle Group Inc. (CG) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).