Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Virtu Financial (VIRT) and American Express (AXP). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Virtu Financial has a Zacks Rank of #1 (Strong Buy), while American Express has a Zacks Rank of #2 (Buy) right now. This means that VIRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
VIRT currently has a forward P/E ratio of 9.99, while AXP has a forward P/E of 20.07. We also note that VIRT has a PEG ratio of 1.20. 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. AXP currently has a PEG ratio of 1.46.
Another notable valuation metric for VIRT is its P/B ratio of 3.83. 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, AXP has a P/B of 7.16.
Based on these metrics and many more, VIRT holds a Value grade of B, while AXP has a Value grade of C.
VIRT stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIRT is the superior value option right now.
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American Express Company (AXP) : 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.
