Investors with an interest in Financial Transaction Services stocks have likely encountered both Cardtronics (CATM - Free Report) and Fiserv (FISV - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Cardtronics and Fiserv are sporting Zacks Ranks of #1 (Strong 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 CATM 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CATM currently has a forward P/E ratio of 17.40, while FISV has a forward P/E of 26.31. We also note that CATM has a PEG ratio of 1.45. 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. FISV currently has a PEG ratio of 2.29.
Another notable valuation metric for CATM is its P/B ratio of 3.66. 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, FISV has a P/B of 11.70.
These are just a few of the metrics contributing to CATM's Value grade of A and FISV's Value grade of D.
CATM sticks out from FISV in both our Zacks Rank and Style Scores models, so value investors will likely feel that CATM is the better option right now.