Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Intercorp Financial Services Inc. (IFS) and R1 RCM Inc. (RCM). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Intercorp Financial Services Inc. and R1 RCM Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IFS has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
IFS currently has a forward P/E ratio of 11.81, while RCM has a forward P/E of 125.10. We also note that IFS has a PEG ratio of 3.36. 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. RCM currently has a PEG ratio of 11.37.
Another notable valuation metric for IFS is its P/B ratio of 1.57. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RCM has a P/B of 38.74.
Based on these metrics and many more, IFS holds a Value grade of A, while RCM has a Value grade of C.
IFS stands above RCM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IFS is the superior value option right now.
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Intercorp Financial Services Inc. (IFS): Free Stock Analysis Report
R1 RCM Inc. (RCM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
