IFS or UPST: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Intercorp Financial Services Inc. (IFS) or Upstart Holdings, Inc. (UPST). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Intercorp Financial Services Inc. is sporting a Zacks Rank of #1 (Strong Buy), while Upstart Holdings, Inc. has a Zacks Rank of #3 (Hold). This means that IFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.

IFS currently has a forward P/E ratio of 3.53, while UPST has a forward P/E of 11.85. We also note that IFS has a PEG ratio of 0.15. 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. UPST currently has a PEG ratio of 0.29.

Another notable valuation metric for IFS is its P/B ratio of 1.45. 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, UPST has a P/B of 3.63.

These are just a few of the metrics contributing to IFS's Value grade of B and UPST's Value grade of D.

IFS has seen stronger estimate revision activity and sports more attractive valuation metrics than UPST, so it seems like value investors will conclude that IFS is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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