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AB vs. HRGLY: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
MGIC (MTG) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors with an interest in Financial - Investment Management stocks have likely encountered both AllianceBernstein (AB) and HARGREAVES LNSD (HRGLY). 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, AllianceBernstein is sporting a Zacks Rank of #2 (Buy), while HARGREAVES LNSD has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AB is likely seeing its earnings outlook improve to a greater extent. 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.

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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.

AB currently has a forward P/E ratio of 11.64, while HRGLY has a forward P/E of 38.71. We also note that AB has a PEG ratio of 1.66. 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. HRGLY currently has a PEG ratio of 2.83.

Another notable valuation metric for AB is its P/B ratio of 1.85. 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, HRGLY has a P/B of 29.08.

These metrics, and several others, help AB earn a Value grade of A, while HRGLY has been given a Value grade of F.

AB stands above HRGLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AB is the superior value option right now.


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AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
 
HARGREAVES LNSD (HRGLY) : Free Stock Analysis Report
 
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