Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Intercorp Financial Services Inc. (IFS) or Blackstone Inc. (BX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Intercorp Financial Services Inc. has a Zacks Rank of #2 (Buy), while Blackstone Inc. has a Zacks Rank of #3 (Hold) right now. This means that IFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
IFS currently has a forward P/E ratio of 6.90, while BX has a forward P/E of 28.26. We also note that IFS has a PEG ratio of 0.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BX currently has a PEG ratio of 1.11.
Another notable valuation metric for IFS is its P/B ratio of 1.31. 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, BX has a P/B of 6.44.
These metrics, and several others, help IFS earn a Value grade of B, while BX has been given a Value grade of D.
IFS has seen stronger estimate revision activity and sports more attractive valuation metrics than BX, so it seems like value investors will conclude that IFS is the superior option right now.
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