Investors interested in Financial - Consumer Loans stocks are likely familiar with Discover (DFS - Free Report) and First Cash Financial Services (FCFS - 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Discover and First Cash Financial Services are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
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.
DFS currently has a forward P/E ratio of 8.84, while FCFS has a forward P/E of 24.45. We also note that DFS has a PEG ratio of 1.18. 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. FCFS currently has a PEG ratio of 1.63.
Another notable valuation metric for DFS is its P/B ratio of 2.35. 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, FCFS has a P/B of 3.14.
These are just a few of the metrics contributing to DFS's Value grade of A and FCFS's Value grade of C.
Both DFS and FCFS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DFS is the superior value option right now.