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SYF vs. VIRT: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Synchrony (SYF - Free Report) and Virtu Financial (VIRT - 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Synchrony has a Zacks Rank of #2 (Buy), while Virtu Financial has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SYF has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SYF currently has a forward P/E ratio of 8.21, while VIRT has a forward P/E of 13.88. We also note that SYF has a PEG ratio of 0.79. 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. VIRT currently has a PEG ratio of 2.78.

Another notable valuation metric for SYF is its P/B ratio of 1.51. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, VIRT has a P/B of 2.96.

These are just a few of the metrics contributing to SYF's Value grade of A and VIRT's Value grade of D.

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


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