Investors looking for stocks in the Financial Transaction Services sector might want to consider either Cardtronics (CATM) or Fiserv (FISV). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Cardtronics and Fiserv are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CATM likely has seen a stronger improvement to its earnings outlook than FISV has recently. However, value investors will care about much more than just this.
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.
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.
CATM currently has a forward P/E ratio of 15.63, while FISV has a forward P/E of 23.94. We also note that CATM has a PEG ratio of 1.42. 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. FISV currently has a PEG ratio of 2.08.
Another notable valuation metric for CATM is its P/B ratio of 2.72. 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, FISV has a P/B of 10.30.
Based on these metrics and many more, CATM holds a Value grade of B, while FISV has a Value grade of D.
CATM sticks out from FISV in both our Zacks Rank and Style Scores models, so value investors will likely feel that CATM is the better option right now.
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