Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Virtu Financial (VIRT) and Circle Internet Group, Inc. (CRCL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Virtu Financial is sporting a Zacks Rank of #1 (Strong Buy), while Circle Internet Group, Inc. 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 VIRT 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.
VIRT currently has a forward P/E ratio of 7.83, while CRCL has a forward P/E of 134.08. We also note that VIRT has a PEG ratio of 1.10. 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. CRCL currently has a PEG ratio of 5.59.
Another notable valuation metric for VIRT is its P/B ratio of 3.49. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CRCL has a P/B of 8.24.
These metrics, and several others, help VIRT earn a Value grade of B, while CRCL has been given a Value grade of F.
VIRT has seen stronger estimate revision activity and sports more attractive valuation metrics than CRCL, so it seems like value investors will conclude that VIRT is the superior option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report
Circle Internet Group, Inc. (CRCL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).