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PYPL or V: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Paypal (PYPL - Free Report) and Visa (V - 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.

Currently, both Paypal and Visa are holding a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

PYPL currently has a forward P/E ratio of 10.11, while V has a forward P/E of 24.68. We also note that PYPL has a PEG ratio of 1.16. 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. V currently has a PEG ratio of 1.74.

Another notable valuation metric for PYPL is its P/B ratio of 2.35. 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, V has a P/B of 19.03.

Based on these metrics and many more, PYPL holds a Value grade of A, while V has a Value grade of D.

Both PYPL and V are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PYPL is the superior value option right now.

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