Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either Santander Consumer (SC) or First Cash Financial Services (FCFS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, both Santander Consumer and First Cash Financial Services are holding a Zacks Rank of # 1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture 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.
SC currently has a forward P/E ratio of 8.28, while FCFS has a forward P/E of 23.07. We also note that SC has a PEG ratio of 1.03. 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. FCFS currently has a PEG ratio of 1.15.
Another notable valuation metric for SC is its P/B ratio of 1.10. 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, FCFS has a P/B of 2.73.
Based on these metrics and many more, SC holds a Value grade of A, while FCFS has a Value grade of D.
Both SC and FCFS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SC is the superior value option right now.
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