Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Virtu Financial (VIRT) or American Express (AXP). 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.
Virtu Financial and American Express are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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 just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
VIRT currently has a forward P/E ratio of 7.89, while AXP has a forward P/E of 17.93. We also note that VIRT has a PEG ratio of 0.37. 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. AXP currently has a PEG ratio of 1.35.
Another notable valuation metric for VIRT is its P/B ratio of 3.77. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, AXP has a P/B of 6.23.
These metrics, and several others, help VIRT earn a Value grade of B, while AXP has been given a Value grade of C.
VIRT sticks out from AXP in both our Zacks Rank and Style Scores models, so value investors will likely feel that VIRT is the better option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).