Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Virtu Financial (VIRT) and American Express (AXP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Virtu Financial is sporting a Zacks Rank of #1 (Strong Buy), while American Express has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VIRT likely has seen a stronger improvement to its earnings outlook than AXP 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.
VIRT currently has a forward P/E ratio of 8.21, while AXP has a forward P/E of 17.67. We also note that VIRT has a PEG ratio of 1.15. 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. AXP currently has a PEG ratio of 1.26.
Another notable valuation metric for VIRT is its P/B ratio of 3.66. 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, AXP has a P/B of 6.24.
These metrics, and several others, help VIRT earn a Value grade of B, while AXP has been given a Value grade of C.
VIRT has seen stronger estimate revision activity and sports more attractive valuation metrics than AXP, 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
American Express Company (AXP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).