TRU or EXPGY: Which Is the Better Value Stock Right Now?

Investors interested in Business - Information Services stocks are likely familiar with TransUnion (TRU) and Experian PLC (EXPGY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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, TransUnion is sporting a Zacks Rank of #2 (Buy), while Experian PLC has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TRU has an improving earnings outlook. 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

TRU currently has a forward P/E ratio of 15.28, while EXPGY has a forward P/E of 18.22. We also note that TRU has a PEG ratio of 1.13. 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. EXPGY currently has a PEG ratio of 1.53.

Another notable valuation metric for TRU is its P/B ratio of 2.88. 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, EXPGY has a P/B of 6.09.

These metrics, and several others, help TRU earn a Value grade of B, while EXPGY has been given a Value grade of C.

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

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

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