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SYF or RPRX: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Synchrony (SYF - Free Report) or Royalty Pharma (RPRX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Synchrony has a Zacks Rank of #2 (Buy), while Royalty Pharma has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SYF has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SYF currently has a forward P/E ratio of 8.55, while RPRX has a forward P/E of 15.88. We also note that SYF has a PEG ratio of 0.95. 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. RPRX currently has a PEG ratio of 1.49.

Another notable valuation metric for SYF is its P/B ratio of 2.09. 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, RPRX has a P/B of 2.60.

These metrics, and several others, help SYF earn a Value grade of A, while RPRX has been given a Value grade of C.

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


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