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Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Evertec (EVTC) and MasterCard (MA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Evertec and MasterCard are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EVTC has an improving earnings outlook. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EVTC currently has a forward P/E ratio of 11.53, while MA has a forward P/E of 36.63. We also note that EVTC has a PEG ratio of 1.34. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MA currently has a PEG ratio of 2.32.
Another notable valuation metric for EVTC is its P/B ratio of 4.52. 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, MA has a P/B of 64.97.
Based on these metrics and many more, EVTC holds a Value grade of A, while MA has a Value grade of D.
EVTC stands above MA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EVTC is the superior value option right now.
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Evertec, Inc. (EVTC) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report