Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Intercorp Financial Services Inc. (IFS) and 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 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 American Express 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
IFS currently has a forward P/E ratio of 9.73, while AXP has a forward P/E of 19.94. We also note that IFS has a PEG ratio of 0.80. 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 1.45.
Another notable valuation metric for IFS is its P/B ratio of 1.76. 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, AXP has a P/B of 7.06.
These are just a few of the metrics contributing to IFS's Value grade of B and AXP's Value grade of C.
IFS has seen stronger estimate revision activity and sports more attractive valuation metrics than AXP, so it seems like value investors will conclude that IFS is the superior option right now.
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Intercorp Financial Services Inc. (IFS): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).