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JMP or MS: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of JMP and Morgan Stanley (MS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

JMP has a Zacks Rank of #2 (Buy), while Morgan Stanley has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JMP is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

JMP currently has a forward P/E ratio of 8.19, while MS has a forward P/E of 14.14. We also note that JMP has a PEG ratio of 0.82. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MS currently has a PEG ratio of 2.24.

Another notable valuation metric for JMP is its P/B ratio of 1.90. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MS has a P/B of 1.92.

These are just a few of the metrics contributing to JMP's Value grade of A and MS's Value grade of C.

JMP has seen stronger estimate revision activity and sports more attractive valuation metrics than MS, so it seems like value investors will conclude that JMP is the superior option right now.


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