Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Grupo Financiero Banorte SAB de CV (GBOOY) or American Express (AXP). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Grupo Financiero Banorte SAB de CV 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 GBOOY 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 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.
GBOOY currently has a forward P/E ratio of 8.96, while AXP has a forward P/E of 19.77. We also note that GBOOY has a PEG ratio of 1.11. 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 1.46.
Another notable valuation metric for GBOOY is its P/B ratio of 2.35. 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 7.1.
Based on these metrics and many more, GBOOY holds a Value grade of A, while AXP has a Value grade of C.
GBOOY has seen stronger estimate revision activity and sports more attractive valuation metrics than AXP, so it seems like value investors will conclude that GBOOY 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.
