Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Virtu Financial (VIRT) and American Express (AXP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Virtu Financial has a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VIRT is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
VIRT currently has a forward P/E ratio of 11.74, while AXP has a forward P/E of 22.67. We also note that VIRT has a PEG ratio of 0.43. 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 1.74.
Another notable valuation metric for VIRT is its P/B ratio of 4.03. 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 7.21.
These metrics, and several others, help VIRT earn a Value grade of A, while AXP has been given a Value grade of C.
VIRT stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIRT is the superior value option right now.
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