EVTC or MA: Which Is the Better Value Stock Right Now?

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 companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Evertec has a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold) right now. 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 analyze a variety of traditional, tried-and-true metrics to help find companies 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.

EVTC currently has a forward P/E ratio of 7.24, while MA has a forward P/E of 25.57. We also note that EVTC has a PEG ratio of 0.93. 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. MA currently has a PEG ratio of 1.60.

Another notable valuation metric for EVTC is its P/B ratio of 2.86. 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, MA has a P/B of 57.51.

Based on these metrics and many more, EVTC holds a Value grade of A, while MA has a Value grade of D.

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

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

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