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Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of Raymond James Financial, Inc. (RJF) and The Charles Schwab Corporation (SCHW). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Raymond James Financial, Inc. has a Zacks Rank of #1 (Strong Buy), while The Charles Schwab Corporation has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RJF is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
RJF currently has a forward P/E ratio of 14.55, while SCHW has a forward P/E of 24.60. We also note that RJF has a PEG ratio of 0.89. 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. SCHW currently has a PEG ratio of 1.69.
Another notable valuation metric for RJF is its P/B ratio of 2.81. 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, SCHW has a P/B of 3.59.
These metrics, and several others, help RJF earn a Value grade of B, while SCHW has been given a Value grade of C.
RJF sticks out from SCHW in both our Zacks Rank and Style Scores models, so value investors will likely feel that RJF is the better option right now.
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Raymond James Financial, Inc. (RJF) : Free Stock Analysis Report
The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report