Are Investors Undervaluing Green Dot (GDOT) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Green Dot (GDOT) is a stock many investors are watching right now. GDOT is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.1, which compares to its industry's average of 21.43. Over the last 12 months, GDOT's Forward P/E has been as high as 10.40 and as low as 4.21, with a median of 7.04.

Finally, investors should note that GDOT has a P/CF ratio of 13.02. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.37. Over the past year, GDOT's P/CF has been as high as 25.01 and as low as 4.91, with a median of 9.65.

Another great Financial Transaction Services stock you could consider is Global Payments (GPN), which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.

Shares of Global Payments currently hold a Forward P/E ratio of 6.53, and its PEG ratio is 0.73. In comparison, its industry sports average P/E and PEG ratios of 21.43 and 1.78.

Over the past year, GPN's P/E has been as high as 9.68, as low as 5.29, with a median of 7.73; its PEG ratio has been as high as 0.84, as low as 0.52, with a median of 0.72 during the same time period.

Furthermore, Global Payments holds a P/B ratio of 0.91 and its industry's price-to-book ratio is 8.45. GPN's P/B has been as high as 1.29, as low as 0.72, with a median of 1.07 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Green Dot and Global Payments are likely undervalued currently. And when considering the strength of its earnings outlook, GDOT and GPN sticks out as one of the market's strongest value stocks.

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

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