Investors looking for stocks in the Financial Transaction Services sector might want to consider either Global Payments (GPN) or RB Global (RBA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Global Payments and RB Global are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GPN likely has seen a stronger improvement to its earnings outlook than RBA has recently. But this is just one factor that value investors are interested in.
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.
GPN currently has a forward P/E ratio of 5.78, while RBA has a forward P/E of 25.61. We also note that GPN has a PEG ratio of 0.64. 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. RBA currently has a PEG ratio of 1.95.
Another notable valuation metric for GPN is its P/B ratio of 0.81. 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 3.76.
Based on these metrics and many more, GPN holds a Value grade of A, while RBA has a Value grade of C.
GPN sticks out from RBA in both our Zacks Rank and Style Scores models, so value investors will likely feel that GPN is the better option right now.
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Global Payments Inc. (GPN): 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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