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PAY or ENV: Which Is the Better Value Stock Right Now?

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Investors interested in Financial Transaction Services stocks are likely familiar with VeriFone Systems (PAY - Free Report) and Envestnet (ENV - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

VeriFone Systems and Envestnet are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell) respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PAY is likely seeing its earnings outlook improve. But this is just one piece of the puzzle for value investors.

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.

PAY currently has a forward P/E ratio of 18.72, while ENV has a forward P/E of 43.13. We also note that PAY has a PEG ratio of 1.25. 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. ENV currently has a PEG ratio of 3.03.

Another notable valuation metric for PAY is its P/B ratio of 3.03. 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, ENV has a P/B of 5.32.

These are just a few of the metrics contributing to PAY's Value grade of B and ENV's Value grade of F.

PAY stands above ENV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAY is the superior value option right now.


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