Investors interested in Financial - Consumer Loans stocks are likely familiar with OneMain Holdings (OMF) and Sallie Mae (SLM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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, OneMain Holdings is sporting a Zacks Rank of #2 (Buy), while Sallie Mae has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OMF has an improving earnings outlook. But this is just one piece of the puzzle 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.
OMF currently has a forward P/E ratio of 9.60, while SLM has a forward P/E of 9.61. We also note that OMF has a PEG ratio of 0.47. 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. SLM currently has a PEG ratio of 0.84.
Another notable valuation metric for OMF is its P/B ratio of 2.19. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SLM has a P/B of 2.93.
These are just a few of the metrics contributing to OMF's Value grade of A and SLM's Value grade of C.
OMF has seen stronger estimate revision activity and sports more attractive valuation metrics than SLM, so it seems like value investors will conclude that OMF is the superior option right now.
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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.
