Investors interested in Financial Transaction Services stocks are likely familiar with Evertec (EVTC) and RB Global (RBA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Evertec has a Zacks Rank of #2 (Buy), while RB Global has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EVTC has an improving earnings outlook. However, value investors will care about much more than just this.
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.
EVTC currently has a forward P/E ratio of 8.17, while RBA has a forward P/E of 25.36. We also note that EVTC has a PEG ratio of 1.03. 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. RBA currently has a PEG ratio of 1.93.
Another notable valuation metric for EVTC is its P/B ratio of 2.81. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RBA has a P/B of 3.31.
These are just a few of the metrics contributing to EVTC's Value grade of A and RBA's Value grade of C.
EVTC has seen stronger estimate revision activity and sports more attractive valuation metrics than RBA, so it seems like value investors will conclude that EVTC is the superior option right now.
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Evertec, Inc. (EVTC): Free Stock Analysis Report RB Global, Inc. (RBA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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