Yahoo Finance AXP vs. BAM: Which Stock Is the Better Value Option?
Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both American Express (AXP) and Brookfield Asset Management (BAM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, American Express has a Zacks Rank of #2 (Buy), while Brookfield Asset Management has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AXP likely has seen a stronger improvement to its earnings outlook than BAM 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.
AXP currently has a forward P/E ratio of 17.89, while BAM has a forward P/E of 25.74. We also note that AXP has a PEG ratio of 1.32. 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. BAM currently has a PEG ratio of 1.71.
Another notable valuation metric for AXP is its P/B ratio of 5.82. 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, BAM has a P/B of 7.04.
Based on these metrics and many more, AXP holds a Value grade of B, while BAM has a Value grade of F.
AXP has seen stronger estimate revision activity and sports more attractive valuation metrics than BAM, so it seems like value investors will conclude that AXP is the superior option right now.
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American Express Company (AXP) : Free Stock Analysis Report
Brookfield Asset Management Ltd. (BAM) : Free Stock Analysis Report
