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RJF vs. SCHW: Which Stock Is the Better Value Option?
Investors with an interest in Financial - Investment Bank stocks have likely encountered both Raymond James Financial, Inc. (RJF - Free Report) and The Charles Schwab Corporation (SCHW - Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Raymond James Financial, Inc. and The Charles Schwab Corporation have a Zacks Rank of # 2 (Buy) right now. 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 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
RJF currently has a forward P/E ratio of 13.85, while SCHW has a forward P/E of 18.87. We also note that RJF has a PEG ratio of 0.90. 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. SCHW currently has a PEG ratio of 0.98.
Another notable valuation metric for RJF is its P/B ratio of 2.67. 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, SCHW has a P/B of 3.61.
These are just a few of the metrics contributing to RJF's Value grade of B and SCHW's Value grade of C.
Both RJF and SCHW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RJF is the superior value option right now.