Back to top

Image: Bigstock

WEX vs. EFX: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Financial Transaction Services stocks are likely familiar with Wex (WEX - Free Report) and Equifax (EFX - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Wex has a Zacks Rank of #2 (Buy), while Equifax has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that WEX likely has seen a stronger improvement to its earnings outlook than EFX has recently. However, value investors will care about much more than just this.

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 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.

WEX currently has a forward P/E ratio of 12.20, while EFX has a forward P/E of 33.33. We also note that WEX has a PEG ratio of 0.99. 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. EFX currently has a PEG ratio of 2.12.

Another notable valuation metric for WEX is its P/B ratio of 4.67. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EFX has a P/B of 6.71.

Based on these metrics and many more, WEX holds a Value grade of A, while EFX has a Value grade of C.

WEX has seen stronger estimate revision activity and sports more attractive valuation metrics than EFX, so it seems like value investors will conclude that WEX is the superior option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Equifax, Inc. (EFX) - free report >>

WEX Inc. (WEX) - free report >>

Published in