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HLI vs. EEFT: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Houlihan Lokey (HLI - Free Report) or Euronet Worldwide (EEFT - 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 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.
Right now, Houlihan Lokey is sporting a Zacks Rank of #2 (Buy), while Euronet Worldwide has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HLI has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HLI currently has a forward P/E ratio of 15.79, while EEFT has a forward P/E of 21.59. We also note that HLI has a PEG ratio of 1.26. 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. EEFT currently has a PEG ratio of 1.62.
Another notable valuation metric for HLI is its P/B ratio of 3.63. 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, EEFT has a P/B of 6.04.
These are just a few of the metrics contributing to HLI's Value grade of B and EEFT's Value grade of D.
HLI has seen stronger estimate revision activity and sports more attractive valuation metrics than EEFT, so it seems like value investors will conclude that HLI is the superior option right now.