PSFE vs. FOUR: Which Stock Is the Better Value Option?

Investors looking for stocks in the Financial Transaction Services sector might want to consider either Paysafe Limited (PSFE) or Shift4 Payments (FOUR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Paysafe Limited and Shift4 Payments have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

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.

PSFE currently has a forward P/E ratio of 5.46, while FOUR has a forward P/E of 17.40. We also note that PSFE has a PEG ratio of 0.30. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FOUR currently has a PEG ratio of 0.57.

Another notable valuation metric for PSFE is its P/B ratio of 0.9. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FOUR has a P/B of 8.47.

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

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