Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Investment Banking & Brokerage Services industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Investment Banking & Brokerage Services Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Investment Banking & Brokerage Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Investment Banking & Brokerage Services industry for Monday, April 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Investment Banking & Brokerage Services industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Citigroup Inc’s Value Grade

Value Grade:

Citigroup Inc. is a diversified financial services holding company. Its segments include Services, Markets, Banking, U.S. Personal Banking (USPB) and Wealth. Services segment includes treasury and trade solutions (TTS) and securities services. TTS provides an integrated suite of tailored cash management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations. Markets segment provides corporate, institutional and public sector clients around the world with a full range of sales and trading services across equities, foreign exchange, rates, spread products and commodities. Banking segment includes investment banking, which supports client capital-raising needs to help strengthen and grow their businesses. USPB segment includes branded cards and retail services, which have proprietary card portfolios and co-branded card portfolios. Wealth includes private bank, wealth at work and Citigold and provides financial services.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Citigroup Inc has a Value Score of 93, which is considered to be undervalued.

When you look at Citigroup Inc’s price-to-sales ratio at 0.86 compared to the industry median at 1.66, this company has a lower price relative to revenue compared to its peers. This could make Citigroup Inc’s stock more attractive for value investors.

Citigroup Inc’s price-earnings ratio is 14.94 compared to the industry median at 17.07. This means it has a lower share price relative to earnings compared to its peers. This could make Citigroup Inc more attractive for value investors.

Now, let’s assess Citigroup Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.7, when compared to the industry median of 19.2, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Citigroup Inc’s shareholder yield is higher than its industry median ratio of 1.87%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Citigroup Inc’s price-to-book ratio is lower than its industry median ratio of 1.97. This could make Citigroup Inc more attractive to investors looking for a new addition to their portfolio.

Morgan Group Holding Co’s Value Grade

Value Grade:

Morgan Group Holding Co. is a holding company. The Company operates through its subsidiary, G.research, LLC, which is a broker-dealer. The Company also acts as an underwriter and provides institutional research services. The Company is engaged in institutional research and securities brokerage services, including acting as an underwriter. It provides institutional services to institutional investors, including hedge funds and asset managers, as well as affiliated mutual funds and managed accounts. The Company hold an investment in an affiliated money market mutual fund which is invested solely in United States treasuries.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Morgan Group Holding Co has a Value Score of 97, which is considered to be undervalued.

Morgan Group Holding Co’s price-to-book ratio is higher than its peers. This could make Morgan Group Holding Co less attractive for value investors when compared to the industry median at 1.97.

You can read more about Morgan Group Holding Co’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Virtu Financial Inc’s Value Grade

Value Grade:

Virtu Financial, Inc. is a financial services company that leverages technology to provide execution services and data, analytics and connectivity products to its clients and deliver liquidity to the global markets. The Company's segments include Market Making and Execution Services. The Market Making segment principally consists of market making in the cash, futures, and options markets across global equities, fixed income, currencies, cryptocurrencies, and commodities. The Execution Services segment offers agency execution services and trading venues that provide trading in global equities, exchange traded funds, fixed income, currencies, and commodities to institutions, banks and broker dealers. The Company's integrated, multi-asset analytics platform provides a range of pre- and post-trade services, data products and compliance tools. It provides a product suite, including offerings in liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Virtu Financial Inc has a Value Score of 70, which is considered to be undervalued.

Virtu Financial Inc’s price-earnings ratio is 14.7 compared to the industry median at 17.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Virtu Financial Inc more attractive for value investors.

Virtu Financial Inc’s price-to-book ratio is higher than its peers. This could make Virtu Financial Inc less attractive for value investors when compared to the industry median at 1.97.

You can read more about Virtu Financial Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Investment Banking & Brokerage Services Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Investment Banking & Brokerage Services stocks as well as other industrys.

Choosing Which of the 3 Best Investment Banking & Brokerage Services Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Citigroup Inc stock has a Value Grade of A.
• Morgan Group Holding Co stock has a Value Grade of A.
• Virtu Financial Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Investment Banking & Brokerage Services industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Investment Banking & Brokerage Services Stocks

Want to learn more about Investment Banking & Brokerage Services stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Investment Banking & Brokerage Services Stocks for Monday, April 15
• Why Morgan Stanley’s (MS) Stock Is Down 5.25%
• Why Moelis & Co’s (MC) Stock Is Down 5.39%
• Why XP Inc’s (XP) Stock Is Down 4.50%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.