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Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Virtu Financial (VIRT) and Blackstone Inc. (BX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Virtu Financial and Blackstone Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that VIRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
VIRT currently has a forward P/E ratio of 10.59, while BX has a forward P/E of 40.15. We also note that VIRT has a PEG ratio of 0.45. 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. BX currently has a PEG ratio of 1.51.
Another notable valuation metric for VIRT is its P/B ratio of 3.64. 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, BX has a P/B of 6.85.
These metrics, and several others, help VIRT earn a Value grade of A, while BX has been given a Value grade of D.
VIRT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that VIRT is likely the superior value option right now.
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Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report