Investors with an interest in Financial - Consumer Loans stocks have likely encountered both Capital One (COF) and First Cash Financial Services (FCFS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Capital One and First Cash Financial Services are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that COF likely has seen a stronger improvement to its earnings outlook than FCFS has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
COF currently has a forward P/E ratio of 7.63, while FCFS has a forward P/E of 23.47. We also note that COF has a PEG ratio of 0.70. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FCFS currently has a PEG ratio of 1.17.
Another notable valuation metric for COF is its P/B ratio of 0.84. 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, FCFS has a P/B of 2.74.
These are just a few of the metrics contributing to COF's Value grade of A and FCFS's Value grade of C.
COF sticks out from FCFS in both our Zacks Rank and Style Scores models, so value investors will likely feel that COF is the better option right now.
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Capital One Financial Corporation (COF) : Free Stock Analysis Report
First Cash, Inc. (FCFS) : Free Stock Analysis Report
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