Investors interested in Financial - Investment Management stocks are likely familiar with Victory Capital Holdings (VCTR) and SEI Investments (SEIC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Victory Capital Holdings has a Zacks Rank of #1 (Strong Buy), while SEI Investments has a Zacks Rank of #3 (Hold) right now. This means that VCTR'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 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.
VCTR currently has a forward P/E ratio of 10.01, while SEIC has a forward P/E of 16.73. We also note that VCTR has a PEG ratio of 0.48. 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. SEIC currently has a PEG ratio of 1.39.
Another notable valuation metric for VCTR is its P/B ratio of 3.50. 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, SEIC has a P/B of 4.48.
These metrics, and several others, help VCTR earn a Value grade of B, while SEIC has been given a Value grade of C.
VCTR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that VCTR is likely the superior value option right now.
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Today, See These 5 Potential Home Runs >>Victory Capital Holdings, Inc. (VCTR) : Free Stock Analysis Report
SEI Investments Company (SEIC) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
