Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Bread Financial Holdings (BFH) or American Express (AXP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Bread Financial Holdings has a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than AXP has recently. But this is only part of the picture for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BFH currently has a forward P/E ratio of 7.32, while AXP has a forward P/E of 24.80. We also note that BFH has a PEG ratio of 0.47. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AXP currently has a PEG ratio of 1.72.
Another notable valuation metric for BFH 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, AXP has a P/B of 8.13.
These are just a few of the metrics contributing to BFH's Value grade of A and AXP's Value grade of C.
BFH has seen stronger estimate revision activity and sports more attractive valuation metrics than AXP, so it seems like value investors will conclude that BFH is the superior option right now.
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American Express Company (AXP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
