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Investors looking for stocks in the Financial Transaction Services sector might want to consider either Evertec (EVTC) or Equifax (EFX). 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.
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.
Currently, Evertec has a Zacks Rank of #2 (Buy), while Equifax has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EVTC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.
EVTC currently has a forward P/E ratio of 11.44, while EFX has a forward P/E of 36.40. We also note that EVTC has a PEG ratio of 1.33. 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. EFX currently has a PEG ratio of 3.29.
Another notable valuation metric for EVTC is its P/B ratio of 4.51. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EFX has a P/B of 6.66.
Based on these metrics and many more, EVTC holds a Value grade of A, while EFX has a Value grade of D.
EVTC 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 EVTC is likely the superior value option right now.
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Evertec, Inc. (EVTC) : Free Stock Analysis Report
Equifax, Inc. (EFX) : Free Stock Analysis Report