Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Capital Markets 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 Capital Markets 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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6 Undervalued Capital Markets Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Capital Markets industry for Tuesday, October 22, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Capital Markets 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.

GCM Grosvenor Inc.’s Value Grade

Value Grade:

GCM Grosvenor Inc. is global alternative asset management solutions provider. The firm primarily provides its services to pooled investment vehicles. It also provides its services to investment companies, high net worth individuals, pension and profit sharing plans and state or municipal government entities. The firm invests in equity and alternative investment markets of the United States and internationally. The firm invests in multi-strategy, credit-focused, equity-focused, macro-focused, commodity-focused, and other specialty portfolios. It focuses in hedge fund asset classes, private equity, real estate, and/or infrastructure, credit and absolute return strategies. It also focuses in primary fund investments, secondary fund investments, and co-investments with a focus on buyout, distressed debt, mezzanine, venture capital/growth equity investments. The firm seeks to do seed investments in small, emerging, and diverse private equity firms. The firm seeks to make regionally-focused investments in middle-market buyout. It prefers to invest in aerospace and defense, advanced electronics, information technology, biosciences, and advanced materials. It focuses on Ohio and the Midwest region. The firm employs fundamental and quantitative analysis. GCM Grosvenor Inc. was founded in 1971 and is based in Chicago, Illinois with additional offices in North America, Asia, Australia and Europe.

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.

GCM Grosvenor Inc. has a Value Score of 65, which is considered to be undervalued.

When you look at GCM Grosvenor Inc.’s price-to-sales ratio at 1.13 compared to the industry median at 2.97, this company has a lower price relative to revenue compared to its peers. This could make GCM Grosvenor Inc.’s stock more attractive for value investors.

Now, let’s assess GCM Grosvenor Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 17.0, when compared to the industry median of 15.0, the company may be considered overvalued 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. GCM Grosvenor Inc.’s shareholder yield is higher than its industry median ratio of 0.50%. 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.

Lastly, let’s take a look at GCM Grosvenor Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. GCM Grosvenor Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.55. This could make GCM Grosvenor Inc. more attractive because the lower P/FCF ratio indicates that GCM Grosvenor Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

GlassBridge Enterprises, Inc.’s Value Grade

Value Grade:

GlassBridge Enterprises, Inc., through its subsidiaries, owns and operates an asset management business in the United States. It offers investment advisory services to third party investors through managed funds separate managed accounts. The company was formerly known as Imation Corp. and changed its name to GlassBridge Enterprises, Inc. in February 2017. GlassBridge Enterprises, Inc. was incorporated in 1996 and is headquartered in New York, New York.

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.

GlassBridge Enterprises, Inc. has a Value Score of 64, which is considered to be undervalued.

GlassBridge Enterprises, Inc.’s price-to-book ratio is higher than its peers. This could make GlassBridge Enterprises, Inc. less attractive for value investors when compared to the industry median at 2.05.

You can read more about GlassBridge Enterprises, 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.

The Goldman Sachs Group, Inc.’s Value Grade

Value Grade:

The Goldman Sachs Group, Inc., a financial institution, provides a range of financial services for corporations, financial institutions, governments, and individuals worldwide. It operates through Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments. The Global Banking & Markets segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs; and relationship lending, and acquisition financing, as well as secured lending, through structured credit and asset-backed lending and involved in financing under securities to resale agreements. This segment also offers client execution activities for cash and derivative instruments; credit and interest rate products; and provision of mortgages, currencies, commodities, and equities related products, as well as underwriting services. The Asset & Wealth Management segment manages assets across various classes, including equity, fixed income, hedge funds, credit funds, private equity, real estate, currencies, and commodities; and provides customized investment advisory solutions, wealth advisory services, personalized financial planning, and private banking services, as well as invests in corporate equity, credit, real estate, and infrastructure assets. The Platform Solutions segment offers credit cards and point-of-sale financing for purchase of goods or services. This segment also provides cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.

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.

The Goldman Sachs Group, Inc. has a Value Score of 62, which is considered to be undervalued.

The Goldman Sachs Group, Inc.’s price-earnings ratio is 15.2 compared to the industry median at 22.3. This means that it has a lower price relative to its earnings compared to its peers. This makes The Goldman Sachs Group, Inc. more attractive for value investors.

The Goldman Sachs Group, Inc.’s price-to-book ratio is higher than its peers. This could make The Goldman Sachs Group, Inc. less attractive for value investors when compared to the industry median at 2.05.

You can read more about The Goldman Sachs Group, 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.

Nomura Holdings, Inc.’s Value Grade

Value Grade:

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Wealth Management, Investment Management, and Wholesale. The Wealth Management segment offers various financial products and investment consultation services. The Investment Management segment offers investment trust management, discretionary investment services, and investment funds. The Wholesale segment is involved in the sale, trading, agency execution, and market-making of fixed income and equity products, as well as structured financing and solutions. This segment also engages in underwriting various securities and other financial instruments, such as various classes of shares, convertible and exchangeable securities, investment grade and high yield debts, sovereign and emerging market debts, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and provision of financial advisory services on business transactions comprising mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was incorporated in 1925 and is headquartered in Tokyo, Japan.

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.

Nomura Holdings, Inc. has a Value Score of , which is considered to be overvalued.

Nomura Holdings, Inc.’s price-earnings ratio is 12.4 compared to the industry median at 22.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Nomura Holdings, Inc. more attractive for value investors.

You can read more about Nomura Holdings, 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.

Noah Holdings Limited’s Value Grade

Value Grade:

Noah Holdings Limited, together with its subsidiaries, operates as a wealth and asset management service provider with the focus on investment and asset allocation services for high net worth individuals and enterprises in Mainland of China, Hong Kong, and internationally. It operates through three segments: Wealth Management, Asset Management, and Other Services. The company offers investment products, including domestic and overseas mutual fund products, private secondary products, and other products; customized value-added financial services, such as investor education and trust services, as well as insurance brokerage services; and insurance products. It also provides onshore and offshore private equity, real estate, public securities, multi-strategy, and other investment products, as well as lending services. The company was founded in 2005 and is headquartered in Shanghai, the People’s Republic of China.

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.

Noah Holdings Limited has a Value Score of 100, which is considered to be undervalued.

Noah Holdings Limited’s price-earnings ratio is 9.5 compared to the industry median at 22.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Noah Holdings Limited more attractive for value investors.

Noah Holdings Limited’s price-to-book ratio is higher than its peers. This could make Noah Holdings Limited less attractive for value investors when compared to the industry median at 2.05.

You can read more about Noah Holdings Limited’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.

Westwood Holdings Group, Inc.’s Value Grade

Value Grade:

Westwood Holdings Group, Inc., through its subsidiaries, manages investment assets and provides services for its clients. The company operates in two segments, Advisory and Trust. The Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, and the Westwood Funds; and investment sub-advisory services to mutual funds, pooled investment vehicles, and its Trust segment. The Trust segment offers trust and custodial services; and participates in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Holdings Group, Inc. was founded in 1983 and is based in Dallas, Texas.

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.

Westwood Holdings Group, Inc. has a Value Score of 70, which is considered to be undervalued.

Westwood Holdings Group, Inc.’s price-earnings ratio is 22.6 compared to the industry median at 22.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Westwood Holdings Group, Inc. less attractive for value investors.

Westwood Holdings Group, Inc.’s price-to-book ratio is higher than its peers. This could make Westwood Holdings Group, Inc. less attractive for value investors when compared to the industry median at 2.05.

You can read more about Westwood Holdings Group, 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 Capital Markets 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 Capital Markets stocks as well as other industrys.

Choosing Which of the 6 Best Capital Markets 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.

• GCM Grosvenor Inc. stock has a Value Grade of B.
• GlassBridge Enterprises, Inc. stock has a Value Grade of B.
• The Goldman Sachs Group, Inc. stock has a Value Grade of B.
• Nomura Holdings, Inc. stock has a Value Grade of NA.
• Noah Holdings Limited stock has a Value Grade of A.
• Westwood Holdings Group, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Capital Markets 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 Capital Markets Stocks

Want to learn more about Capital Markets 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.

• 5 Undervalued Capital Markets Stocks for Tuesday, October 22
• 6 Undervalued Capital Markets Stocks for Monday, October 21
• 3 Undervalued Capital Markets Stocks for Friday, October 18
• 3 Undervalued Capital Markets Stocks for Thursday, October 17

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.