Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Intercorp Financial Services Inc. (IFS) and SoFi Technologies, Inc. (SOFI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Intercorp Financial Services Inc. has a Zacks Rank of #1 (Strong Buy), while SoFi Technologies, Inc. has a Zacks Rank of #2 (Buy) right now. 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
IFS currently has a forward P/E ratio of 8.52, while SOFI has a forward P/E of 88.32. We also note that IFS has a PEG ratio of 0.35. 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. SOFI currently has a PEG ratio of 3.34.
Another notable valuation metric for IFS is its P/B ratio of 1.43. 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, SOFI has a P/B of 4.56.
Based on these metrics and many more, IFS holds a Value grade of B, while SOFI has a Value grade of F.
IFS stands above SOFI 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 SoFi Technologies, Inc. (SOFI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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