Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either Santander Consumer (SC) or First Cash Financial Services (FCFS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Santander Consumer and First Cash Financial Services are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
SC currently has a forward P/E ratio of 8.23, while FCFS has a forward P/E of 23.30. We also note that SC has a PEG ratio of 1.03. 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. FCFS currently has a PEG ratio of 1.16.
Another notable valuation metric for SC is its P/B ratio of 1.09. 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, FCFS has a P/B of 2.76.
These are just a few of the metrics contributing to SC's Value grade of A and FCFS's Value grade of C.
SC sticks out from FCFS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SC is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Santander Consumer USA Holdings Inc. (SC): Free Stock Analysis Report First Cash, Inc. (FCFS): Free Stock Analysis Report To read this article on Zacks.com click here.