Investors looking for stocks in the Financial - Investment Management sector might want to consider either Victory Capital Holdings (VCTR) or TPG Inc. (TPG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Victory Capital Holdings has a Zacks Rank of #2 (Buy), while TPG Inc. has a Zacks Rank of #3 (Hold). This means that VCTR'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 are also interested in a number of tried-and-true valuation metrics that help show when 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.
VCTR currently has a forward P/E ratio of 6.80, while TPG has a forward P/E of 19.74. We also note that VCTR has a PEG ratio of 0.76. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TPG currently has a PEG ratio of 1.65.
Another notable valuation metric for VCTR is its P/B ratio of 2.10. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TPG has a P/B of 4.32.
Based on these metrics and many more, VCTR holds a Value grade of A, while TPG has a Value grade of D.
VCTR has seen stronger estimate revision activity and sports more attractive valuation metrics than TPG, so it seems like value investors will conclude that VCTR is the superior option right now.
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