BFH or HASI: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Bread Financial Holdings (BFH) and HA Sustainable Infrastructure Capital (HASI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Bread Financial Holdings is sporting a Zacks Rank of #1 (Strong Buy), while HA Sustainable Infrastructure Capital has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BFH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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 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.
BFH currently has a forward P/E ratio of 8.63, while HASI has a forward P/E of 12.98. We also note that BFH has a PEG ratio of 0.66. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HASI currently has a PEG ratio of 1.15.
Another notable valuation metric for BFH is its P/B ratio of 1.19. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HASI has a P/B of 1.92.
Based on these metrics and many more, BFH holds a Value grade of B, while HASI has a Value grade of D.
BFH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BFH is likely the superior value option right now.
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HA Sustainable Infrastructure Capital, Inc. (HASI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
