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Investors interested in Financial - Investment Management stocks are likely familiar with Seaspan (ATCO) and Blackstone Group (NYSE:BX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Seaspan has a Zacks Rank of #2 (Buy), while Blackstone Group has a Zacks Rank of #3 (Hold) right now. This means that ATCO'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 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.
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.
ATCO currently has a forward P/E ratio of 6.44, while BX has a forward P/E of 12.31. We also note that ATCO has a PEG ratio of 0.55. 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 0.71.
Another notable valuation metric for ATCO is its P/B ratio of 0.42. 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, BX has a P/B of 1.58.
These are just a few of the metrics contributing to ATCO's Value grade of B and BX's Value grade of D.
ATCO has seen stronger estimate revision activity and sports more attractive valuation metrics than BX, so it seems like value investors will conclude that ATCO is the superior option right now.
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