Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Orix (IX) and American Express (AXP). 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.
Orix and American Express are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that IX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
IX currently has a forward P/E ratio of 8.02, while AXP has a forward P/E of 16.58. We also note that IX has a PEG ratio of 0.87. 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. AXP currently has a PEG ratio of 1.23.
Another notable valuation metric for IX is its P/B ratio of 0.82. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AXP has a P/B of 5.67.
These are just a few of the metrics contributing to IX's Value grade of A and AXP's Value grade of C.
IX sticks out from AXP in both our Zacks Rank and Style Scores models, so value investors will likely feel that IX is the better option right now.
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Orix Corp Ads (IX): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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