IVZ or CG: Which Is the Better Value Stock Right Now?

Investors with an interest in Financial - Investment Management stocks have likely encountered both Invesco (IVZ) and Carlyle Group (CG). 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Invesco has a Zacks Rank of #1 (Strong Buy), while Carlyle Group has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that IVZ likely has seen a stronger improvement to its earnings outlook than CG has recently. However, value investors will care about much more than just this.

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 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.

IVZ currently has a forward P/E ratio of 11.54, while CG has a forward P/E of 13.18. We also note that IVZ has a PEG ratio of 0.52. 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. CG currently has a PEG ratio of 1.46.

Another notable valuation metric for IVZ is its P/B ratio of 1.36. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CG has a P/B of 2.42.

These are just a few of the metrics contributing to IVZ's Value grade of B and CG's Value grade of D.

IVZ 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 IVZ is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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