GPN vs. MA: Which Stock Is the Better Value Option?

Investors with an interest in Financial Transaction Services stocks have likely encountered both Global Payments (GPN) 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Global Payments has a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold). This means that GPN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

GPN currently has a forward P/E ratio of 5.19, while MA has a forward P/E of 27.34. We also note that GPN has a PEG ratio of 0.45. 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 1.76.

Another notable valuation metric for GPN is its P/B ratio of 0.73. 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 59.12.

These metrics, and several others, help GPN earn a Value grade of A, while MA has been given a Value grade of D.

GPN sticks out from MA 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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This article originally published on Zacks Investment Research (zacks.com).

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