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 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Synchrony has a Zacks Rank of #2 (Buy), while Virtu Financial has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SYF is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SYF currently has a forward P/E ratio of 7.33, while VIRT has a forward P/E of 15.84. We also note that SYF has a PEG ratio of 0.70. 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. VIRT currently has a PEG ratio of 3.17.
Another notable valuation metric for SYF is its P/B ratio of 1.33. 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, VIRT has a P/B of 3.50.
Based on these metrics and many more, SYF holds a Value grade of A, while VIRT has a Value grade of F.
SYF has seen stronger estimate revision activity and sports more attractive valuation metrics than VIRT, so it seems like value investors will conclude that SYF is the superior option right now.