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MS vs. TW: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Financial - Investment Bank sector might want to consider either Morgan Stanley (MS) or Tradeweb Markets (TW). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Morgan Stanley and Tradeweb Markets are sporting 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 only part of the picture for value investors.

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.

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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.

MS currently has a forward P/E ratio of 14.11, while TW has a forward P/E of 50.43. We also note that MS has a PEG ratio of 2.01. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TW currently has a PEG ratio of 2.40.

Another notable valuation metric for MS is its P/B ratio of 1.88. 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, TW has a P/B of 4.17.

Based on these metrics and many more, MS holds a Value grade of A, while TW has a Value grade of D.

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


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Morgan Stanley (MS) : Free Stock Analysis Report
 
Tradeweb Markets Inc. (TW) : Free Stock Analysis Report
 
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