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RITM or SOFI: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Rithm (RITM - Free Report) and SoFi Technologies, Inc. (SOFI - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Rithm and SoFi Technologies, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RITM is likely seeing its earnings outlook improve to a greater extent. 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.

RITM currently has a forward P/E ratio of 4.04, while SOFI has a forward P/E of 27.31. We also note that RITM has a PEG ratio of 0.58. 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. SOFI currently has a PEG ratio of 0.95.

Another notable valuation metric for RITM is its P/B ratio of 0.7. 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, SOFI has a P/B of 1.91.

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

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

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