Investors looking for stocks in the Financial - Investment Management sector might want to consider either Federated Hermes (FHI) or BlackRock (BLK). 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Federated Hermes and BlackRock have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
FHI currently has a forward P/E ratio of 10.68, while BLK has a forward P/E of 23.81. We also note that FHI has a PEG ratio of 0.83. 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. BLK currently has a PEG ratio of 3.25.
Another notable valuation metric for FHI is its P/B ratio of 3.37. 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, BLK has a P/B of 3.5.
These metrics, and several others, help FHI earn a Value grade of A, while BLK has been given a Value grade of D.
Both FHI and BLK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FHI is the superior value option right now.
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Federated Hermes, Inc. (FHI) : Free Stock Analysis Report
BlackRock (BLK) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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Evaluating FHI against BLK, it becomes overwhelmingly clear that superior financial performance and long-term growth potential tilt the scales in favor ofBLK as the more attractive value option for investors.
In the faceoff between FHI and BLK stocks, investors must consider their respective dividend yields alongside future earnings projections while considering individual risk appetites to determine which holds more value for a prudent investment.
