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NAVI vs. CACC: Which Stock Is the Better Value Option?

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Investors with an interest in Financial - Consumer Loans stocks have likely encountered both Navient (NAVI - Free Report) and Credit Acceptance (CACC - 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Navient and Credit Acceptance are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that NAVI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

NAVI currently has a forward P/E ratio of 5.61, while CACC has a forward P/E of 12.40. We also note that NAVI has a PEG ratio of 0.22. 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. CACC currently has a PEG ratio of 1.24.

Another notable valuation metric for NAVI is its P/B ratio of 1. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CACC has a P/B of 3.74.

These metrics, and several others, help NAVI earn a Value grade of A, while CACC has been given a Value grade of C.

NAVI has seen stronger estimate revision activity and sports more attractive valuation metrics than CACC, so it seems like value investors will conclude that NAVI is the superior option right now.


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