Investors interested in stocks from the Financial - Investment Management sector have probably already heard of Federated Investors (FHI Quick QuoteFHI - Free Report) and Eaton Vance (EV Quick QuoteEV - Free Report) . 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.

Currently, both Federated Investors and Eaton Vance are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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.

FHI currently has a forward P/E ratio of 10.51, while EV has a forward P/E of 19.59. We also note that FHI has a PEG ratio of 0.85. 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. EV currently has a PEG ratio of 1.44.

Another notable valuation metric for FHI is its P/B ratio of 2.63. 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, EV has a P/B of 6.18.

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

Both FHI and EV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FHI is the superior value option right now.