Investors with an interest in Financial – Investment Management stocks have likely encountered both Principal Financial (PFG) and Eaton Vance (EV). 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Principal Financial and Eaton Vance are sporting 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.
PFG currently has a forward P/E ratio of 7.37, while EV has a forward P/E of 11.45. We also note that PFG has a PEG ratio of 1.12. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. EV currently has a PEG ratio of 2.04.
Another notable valuation metric for PFG is its P/B ratio of 0.72. 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, EV has a P/B of 3.42.
These metrics, and several others, help PFG earn a Value grade of A, while EV has been given a Value grade of C.
Both PFG and EV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PFG is the superior value option right now.
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Principal Financial Group, Inc. (PFG): Free Stock Analysis Report
Eaton Vance Corporation (EV): Free Stock Analysis Report
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