PAX vs. CG: Which Stock Should Value Investors Buy Now?

Investors interested in Financial - Investment Management stocks are likely familiar with Patria Investments (PAX) and Carlyle Group (CG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Right now, Patria Investments is sporting a Zacks Rank of #1 (Strong Buy), while Carlyle Group has a Zacks Rank of #3 (Hold). This means that PAX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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 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.

PAX currently has a forward P/E ratio of 8.40, while CG has a forward P/E of 10.93. We also note that PAX has a PEG ratio of 0.53. 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. CG currently has a PEG ratio of 0.94.

Another notable valuation metric for PAX is its P/B ratio of 1.39. 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, CG has a P/B of 2.69.

Based on these metrics and many more, PAX holds a Value grade of A, while CG has a Value grade of C.

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

Zacks Names #1 Semiconductor Stock

This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.

With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.

See This Stock Now for Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Patria Investments Limited (PAX): Free Stock Analysis Report

Carlyle Group Inc. (CG): Free Stock Analysis Report

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

Zacks Investment Research