Investors interested in stocks from the Financial – Miscellaneous Services sector have probably already heard of Globe Life (GL) and Moody’s (MCO). But which of these two companies is the best option for those looking for undervalued stocks? Let’s 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 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.
Currently, both Globe Life and Moody’s 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 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.
GL currently has a forward P/E ratio of 14.89, while MCO has a forward P/E of 27.47. We also note that GL has a PEG ratio of 1.85. 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. MCO currently has a PEG ratio of 2.75.
Another notable valuation metric for GL is its P/B ratio of 1.50. 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, MCO has a P/B of 60.87.
These are just a few of the metrics contributing to GL’s Value grade of B and MCO’s Value grade of D.
Both GL and MCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GL is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment