IFS vs. AXP: Which Stock Should Value Investors Buy Now?

Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Intercorp Financial Services Inc. (IFS) 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.

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 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.

Intercorp Financial Services Inc. and American Express are sporting Zacks Ranks of #2 (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 IFS is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

IFS currently has a forward P/E ratio of 8.51, while AXP has a forward P/E of 19.60. We also note that IFS has a PEG ratio of 0.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AXP currently has a PEG ratio of 1.45.

Another notable valuation metric for IFS is its P/B ratio of 1.43. 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 6.69.

These metrics, and several others, help IFS earn a Value grade of A, while AXP has been given a Value grade of C.

IFS stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IFS is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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