BFH or FUTU: Which Is the Better Value Stock Right Now?

Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Bread Financial Holdings (BFH) and Futu Holdings Limited Sponsored ADR (FUTU). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Right now, Bread Financial Holdings is sporting a Zacks Rank of #2 (Buy), while Futu Holdings Limited Sponsored ADR has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than FUTU has recently. 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 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.

BFH currently has a forward P/E ratio of 8.02, while FUTU has a forward P/E of 10.79. We also note that BFH has a PEG ratio of 0.61. 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. FUTU currently has a PEG ratio of 1.13.

Another notable valuation metric for BFH is its P/B ratio of 1.12. 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, FUTU has a P/B of 2.86.

These are just a few of the metrics contributing to BFH's Value grade of A and FUTU's Value grade of C.

BFH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BFH is likely the superior value option right now.

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

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