Investors looking for stocks in the Financial Transaction Services sector might want to consider either DLocal (DLO) or Shift4 Payments (FOUR). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, DLocal is sporting a Zacks Rank of #2 (Buy), while Shift4 Payments 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 DLO is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.
DLO currently has a forward P/E ratio of 21.17, while FOUR has a forward P/E of 27.94. We also note that DLO has a PEG ratio of 0.77. 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 0.78.
Another notable valuation metric for DLO is its P/B ratio of 8.89. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FOUR has a P/B of 10.44.
These are just a few of the metrics contributing to DLO's Value grade of B and FOUR's Value grade of C.
DLO has seen stronger estimate revision activity and sports more attractive valuation metrics than FOUR, so it seems like value investors will conclude that DLO is the superior option right now.
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Free: See Our Top Stock and 4 Runners Up >>DLocal Limited (DLO) : Free Stock Analysis Report
Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
