Investors looking for stocks in the Financial - Investment Bank sector might want to consider either Nomura Holdings (NMR) or MarketAxess (MKTX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Nomura Holdings is sporting a Zacks Rank of #2 (Buy), while MarketAxess has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NMR likely has seen a stronger improvement to its earnings outlook than MKTX has recently. However, value investors will care about much more than just this.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
NMR currently has a forward P/E ratio of 12.19, while MKTX has a forward P/E of 14.31. We also note that NMR has a PEG ratio of 2.80. 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. MKTX currently has a PEG ratio of 3.08.
Another notable valuation metric for NMR is its P/B ratio of 1.12. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MKTX has a P/B of 3.39.
These are just a few of the metrics contributing to NMR's Value grade of A and MKTX's Value grade of C.
NMR has seen stronger estimate revision activity and sports more attractive valuation metrics than MKTX, so it seems like value investors will conclude that NMR is the superior 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
Nomura Holdings Inc ADR (NMR) : Free Stock Analysis Report
MarketAxess Holdings Inc. (MKTX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
