Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Cardtronics (CATM - Free Report) and Fiserv (FISV - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Cardtronics has a Zacks Rank of #1 (Strong Buy), while Fiserv has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that CATM likely has seen a stronger improvement to its earnings outlook than FISV has recently. 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.
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.
CATM currently has a forward P/E ratio of 13.01, while FISV has a forward P/E of 20.88. We also note that CATM has a PEG ratio of 1.08. 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. FISV currently has a PEG ratio of 1.82.
Another notable valuation metric for CATM is its P/B ratio of 3.02. 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 10.96.
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.