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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 offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Raymond James Financial, Inc. and The Charles Schwab Corporation are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
RJF currently has a forward P/E ratio of 14.42, while SCHW has a forward P/E of 19.34. We also note that RJF has a PEG ratio of 0.94. 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. SCHW currently has a PEG ratio of 0.99.
Another notable valuation metric for RJF is its P/B ratio of 2.77. 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, SCHW has a P/B of 3.82.
Based on these metrics and many more, RJF holds a Value grade of B, while SCHW has a Value grade of C.
Both RJF and SCHW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RJF is the superior value 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