Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Bread Financial Holdings (BFH) 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Bread Financial Holdings and American Express are holding a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
BFH currently has a forward P/E ratio of 6.29, while AXP has a forward P/E of 24.12. We also note that BFH has a PEG ratio of 0.47. 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. AXP currently has a PEG ratio of 1.98.
Another notable valuation metric for BFH is its P/B ratio of 0.87. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AXP has a P/B of 7.87.
Based on these metrics and many more, BFH holds a Value grade of A, while AXP has a Value grade of C.
Both BFH and AXP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BFH is the superior value option right now.
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Bread Financial Holdings, Inc. (BFH): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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