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PYPL vs. MA: Which Stock Should Value Investors Buy Now?

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Investors interested in Financial Transaction Services stocks are likely familiar with Paypal (PYPL - Free Report) and MasterCard (MA - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Paypal and MasterCard are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PYPL likely has seen a stronger improvement to its earnings outlook than MA has recently. 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PYPL currently has a forward P/E ratio of 14.62, while MA has a forward P/E of 35.17. We also note that PYPL has a PEG ratio of 1.23. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MA currently has a PEG ratio of 2.45.

Another notable valuation metric for PYPL is its P/B ratio of 3.57. 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, MA has a P/B of 76.51.

These are just a few of the metrics contributing to PYPL's Value grade of B and MA's Value grade of D.

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


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