XP or BX: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of XP Inc.A (XP) and Blackstone Inc. (BX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

XP Inc.A and Blackstone Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that XP is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

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.

XP currently has a forward P/E ratio of 7.51, while BX has a forward P/E of 23.45. We also note that XP has a PEG ratio of 0.46. 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. BX currently has a PEG ratio of 1.56.

Another notable valuation metric for XP is its P/B ratio of 1.73. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BX has a P/B of 4.96.

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

XP sticks out from BX in both our Zacks Rank and Style Scores models, so value investors will likely feel that XP is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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