Investors interested in stocks from the Financial Transaction Services sector have probably already heard of PagSeguro Digital Ltd. (PAGS) and Shift4 Payments (FOUR). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

PagSeguro Digital Ltd. and Shift4 Payments are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that PAGS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.

PAGS currently has a forward P/E ratio of 6.85, while FOUR has a forward P/E of 16.18. We also note that PAGS has a PEG ratio of 0.61. 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. FOUR currently has a PEG ratio of 0.62.

Another notable valuation metric for PAGS is its P/B ratio of 1.03. 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, FOUR has a P/B of 6.72.

Based on these metrics and many more, PAGS holds a Value grade of B, while FOUR has a Value grade of C.

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

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PagSeguro Digital Ltd. (PAGS) : Free Stock Analysis Report

Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report

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

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