Investors interested in Financial Transaction Services stocks are likely familiar with Corpay (CPAY) and MasterCard (MA). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Corpay has a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold) right now. This means that CPAY'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 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CPAY currently has a forward P/E ratio of 15.02, while MA has a forward P/E of 33.64. We also note that CPAY has a PEG ratio of 1.14. 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 2.34.
Another notable valuation metric for CPAY is its P/B ratio of 7.02. 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 74.98.
Based on these metrics and many more, CPAY holds a Value grade of B, while MA has a Value grade of D.
CPAY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CPAY is likely the superior value option right now.
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Corpay, Inc. (CPAY): Free Stock Analysis Report Mastercard Incorporated (MA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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