Investors interested in Financial - Miscellaneous Services stocks are likely familiar with 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Intercorp Financial Services Inc. and American Express are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that IFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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 9.87, while AXP has a forward P/E of 19.63. We also note that IFS has a PEG ratio of 0.81. 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. AXP currently has a PEG ratio of 1.40.
Another notable valuation metric for IFS is its P/B ratio of 1.79. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AXP has a P/B of 6.83.
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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