Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either American Express (AXP - Free Report) or Euronet Worldwide (EEFT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
American Express and Euronet Worldwide are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AXP has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
AXP currently has a forward P/E ratio of 12.71, while EEFT has a forward P/E of 18.44. We also note that AXP has a PEG ratio of 1.21. 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. EEFT currently has a PEG ratio of 1.38.
Another notable valuation metric for AXP is its P/B ratio of 3.74. 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, EEFT has a P/B of 4.38.
These are just a few of the metrics contributing to AXP's Value grade of B and EEFT's Value grade of C.
AXP stands above EEFT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AXP is the superior value option right now.