Investors looking for stocks in the Financial Transaction Services sector might want to consider either PagSeguro Digital Ltd. (PAGS) or RB Global (RBA). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
PagSeguro Digital Ltd. has a Zacks Rank of #2 (Buy), while RB Global has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that PAGS likely has seen a stronger improvement to its earnings outlook than RBA has recently. 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 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.
PAGS currently has a forward P/E ratio of 5.97, while RBA has a forward P/E of 21.72. We also note that PAGS has a PEG ratio of 0.40. 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. RBA currently has a PEG ratio of 1.33.
Another notable valuation metric for PAGS is its P/B ratio of 1.25. 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, RBA has a P/B of 3.22.
These metrics, and several others, help PAGS earn a Value grade of A, while RBA has been given a Value grade of C.
PAGS has seen stronger estimate revision activity and sports more attractive valuation metrics than RBA, so it seems like value investors will conclude that PAGS 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.
