Investors interested in Financial Transaction Services stocks are likely familiar with Paysafe Limited (PSFE) and Shift4 Payments (FOUR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Right now, both Paysafe Limited and Shift4 Payments are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PSFE currently has a forward P/E ratio of 5.31, while FOUR has a forward P/E of 16.91. We also note that PSFE has a PEG ratio of 0.30. 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. FOUR currently has a PEG ratio of 0.55.
Another notable valuation metric for PSFE is its P/B ratio of 0.88. 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, FOUR has a P/B of 8.23.
Based on these metrics and many more, PSFE holds a Value grade of A, while FOUR has a Value grade of C.
Both PSFE and FOUR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PSFE is the superior value option right now.
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Paysafe Limited (PSFE): Free Stock Analysis Report Shift4 Payments, Inc. (FOUR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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