MS vs. LPLA: Which Stock Should Value Investors Buy Now?
Investors with an interest in Financial – Investment Bank stocks have likely encountered both Morgan Stanley (MS) and LPL Financial (LPLA). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Morgan Stanley is sporting a Zacks Rank of #2 (Buy), while LPL Financial has a Zacks Rank of #3 (Hold). This means that MS’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
MS currently has a forward P/E ratio of 10.41, while LPLA has a forward P/E of 14.25. We also note that MS has a PEG ratio of 0.90. 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. LPLA currently has a PEG ratio of 0.95.
Another notable valuation metric for MS is its P/B ratio of 1.28. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, LPLA has a P/B of 6.13.
These are just a few of the metrics contributing to MS’s Value grade of B and LPLA’s Value grade of C.
MS sticks out from LPLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that MS is the better option right now.
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Morgan Stanley (MS): Free Stock Analysis Report
LPL Financial Holdings Inc. (LPLA): Free Stock Analysis Report
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