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 is more attractive to value investors? We'll need to take a closer look to find out.
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, Cardtronics has a Zacks Rank of #1 (Strong Buy), while Fiserv has a Zacks Rank of #4 (Sell). This means that CATM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 17.49, while FISV has a forward P/E of 25.19. We also note that CATM has a PEG ratio of 1.46. 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. FISV currently has a PEG ratio of 2.19.
Another notable valuation metric for CATM is its P/B ratio of 3.69. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FISV has a P/B of 11.20.
Based on these metrics and many more, CATM holds a Value grade of A, while FISV has a Value grade of D.
CATM stands above FISV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CATM is the superior value option right now.