Investors looking for stocks in the Financial Transaction Services sector might want to consider either Fiserv (FI) or DLocal (DLO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Fiserv and DLocal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that FI likely has seen a stronger improvement to its earnings outlook than DLO has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
FI currently has a forward P/E ratio of 20.44, while DLO has a forward P/E of 20.61. We also note that FI has a PEG ratio of 1.37. 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. DLO currently has a PEG ratio of 2.81.
Another notable valuation metric for FI is its P/B ratio of 4.19. 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, DLO has a P/B of 7.61.
These are just a few of the metrics contributing to FI's Value grade of B and DLO's Value grade of C.
FI stands above DLO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FI is the superior value option right now.
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