Investors with an interest in Financial Transaction Services stocks have likely encountered both Corpay (CPAY) and MasterCard (MA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Corpay has a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CPAY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
CPAY currently has a forward P/E ratio of 13.92, while MA has a forward P/E of 33.49. We also note that CPAY has a PEG ratio of 0.99. 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. MA currently has a PEG ratio of 2.16.
Another notable valuation metric for CPAY is its P/B ratio of 5.07. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MA has a P/B of 62.43.
These are just a few of the metrics contributing to CPAY's Value grade of B and MA's Value grade of D.
CPAY has seen stronger estimate revision activity and sports more attractive valuation metrics than MA, so it seems like value investors will conclude that CPAY is the superior option right now.
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Corpay, Inc. (CPAY): Free Stock Analysis Report Mastercard Incorporated (MA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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