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Is EVERTEC (EVTC) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put EVERTEC Inc. (EVTC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, EVERTEC has a trailing twelve months PE ratio of 9.24, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.63. If we focus on the stock’s long-term PE trend, the current level puts EVERTEC’s current PE ratio below its midpoint over the past four years
Further, the stock’s PE also compares favorably with the Zacks classified Financial Transaction Services industry’s trailing twelve months PE ratio, which stands at 25.87. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that EVERTEC has a forward PE ratio (price relative to this year’s earnings) of 10.02, so it is fair to say that the stock price is likely to appreciate in future
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, EVERTEC has a P/S ratio of about 2.94. This is a bit lower than the S&P 500 average, which comes in at 3.04 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, EVTC is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, EVERTEC currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes EVERTEC a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for EVERTEC is just 0.95, a level that is far lower than the industry average of 1.55. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, EVTC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though EVERTEC might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives EVTC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen two estimates going higher in the past sixty days compared to one going lower, while the full year estimate has seen seven upward and no downward movements in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has risen by 2.5% in the past two months, while the full year estimate has inched lower by 0.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite having a bullish trend, EVERTECholds a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term
Bottom Line
EVERTEC is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 40% out of more than 250 industries) strengthens the company’s overall growth potential. In fact, over the past two years, the Zacks Financial Transaction Services industry has clearly underperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Image: Bigstock
Is EVERTEC (EVTC) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put EVERTEC Inc. (EVTC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, EVERTEC has a trailing twelve months PE ratio of 9.24, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.63. If we focus on the stock’s long-term PE trend, the current level puts EVERTEC’s current PE ratio below its midpoint over the past four years
Further, the stock’s PE also compares favorably with the Zacks classified Financial Transaction Services industry’s trailing twelve months PE ratio, which stands at 25.87. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that EVERTEC has a forward PE ratio (price relative to this year’s earnings) of 10.02, so it is fair to say that the stock price is likely to appreciate in future
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, EVERTEC has a P/S ratio of about 2.94. This is a bit lower than the S&P 500 average, which comes in at 3.04 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, EVTC is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, EVERTEC currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes EVERTEC a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for EVERTEC is just 0.95, a level that is far lower than the industry average of 1.55. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, EVTC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though EVERTEC might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives EVTC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen two estimates going higher in the past sixty days compared to one going lower, while the full year estimate has seen seven upward and no downward movements in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has risen by 2.5% in the past two months, while the full year estimate has inched lower by 0.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Evertec, Inc. Price and Consensus
Evertec, Inc. Price and Consensus | Evertec, Inc. Quote
Despite having a bullish trend, EVERTECholds a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term
Bottom Line
EVERTEC is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 40% out of more than 250 industries) strengthens the company’s overall growth potential. In fact, over the past two years, the Zacks Financial Transaction Services industry has clearly underperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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