BFH vs. FOUR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Bread Financial Holdings (BFH) and Shift4 Payments (FOUR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Bread Financial Holdings is sporting a Zacks Rank of #2 (Buy), while Shift4 Payments has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than FOUR has recently. However, value investors will care about much more than just this.
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.
BFH currently has a forward P/E ratio of 2.47, while FOUR has a forward P/E of 18.62. We also note that BFH has a PEG ratio of 0.09. 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. FOUR currently has a PEG ratio of 0.36.
Another notable valuation metric for BFH is its P/B ratio of 0.56. 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, FOUR has a P/B of 8.91.
These are just a few of the metrics contributing to BFH's Value grade of A and FOUR's Value grade of C.
BFH has seen stronger estimate revision activity and sports more attractive valuation metrics than FOUR, so it seems like value investors will conclude that BFH is the superior option right now.
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Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report
Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report
