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 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Intercorp Financial Services Inc. has a Zacks Rank of #1 (Strong Buy), while American Express 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 IFS has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
IFS currently has a forward P/E ratio of 9.95, while AXP has a forward P/E of 20.11. We also note that IFS has a PEG ratio of 0.82. 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 1.43.
Another notable valuation metric for IFS is its P/B ratio of 1.8. 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 7.13.
These metrics, and several others, help IFS earn a Value grade of B, while AXP has been given a Value grade of C.
IFS stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IFS is the superior value 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).