Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Evertec (EVTC) and MasterCard (MA). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Evertec is sporting a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold). 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. But this is just one piece of the puzzle 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 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 8.14, while MA has a forward P/E of 34.46. We also note that EVTC has a PEG ratio of 1.02. 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. MA currently has a PEG ratio of 2.22.
Another notable valuation metric for EVTC is its P/B ratio of 2.8. 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, MA has a P/B of 64.21.
These are just a few of the metrics contributing to EVTC's Value grade of A and MA's Value grade of D.
EVTC has seen stronger estimate revision activity and sports more attractive valuation metrics than MA, 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 Mastercard Incorporated (MA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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