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Investors interested in Financial - Consumer Loans stocks are likely familiar with Capital One (COF) and Open Lending (LPRO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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, Capital One is sporting a Zacks Rank of #2 (Buy), while Open Lending has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that COF has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
COF currently has a forward P/E ratio of 13.36, while LPRO has a forward P/E of 54.67. We also note that COF has a PEG ratio of 1.32. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LPRO currently has a PEG ratio of 2.78.
Another notable valuation metric for COF is its P/B ratio of 1.10. 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, LPRO has a P/B of 3.55.
These are just a few of the metrics contributing to COF's Value grade of A and LPRO's Value grade of F.
COF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that COF is likely the superior value option right now.
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Capital One Financial Corporation (COF) : Free Stock Analysis Report
Open Lending Corporation (LPRO) : Free Stock Analysis Report