Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Bread Financial Holdings (BFH) and American Express (AXP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Bread Financial Holdings is sporting a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold). This means that BFH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BFH currently has a forward P/E ratio of 6.65, while AXP has a forward P/E of 23.59. We also note that BFH has a PEG ratio of 0.43. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AXP currently has a PEG ratio of 1.64.
Another notable valuation metric for BFH is its P/B ratio of 0.93. 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 7.73.
Based on these metrics and many more, BFH holds a Value grade of A, while AXP has a Value grade of C.
BFH sticks out from AXP in both our Zacks Rank and Style Scores models, so value investors will likely feel that BFH is the better 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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