ECPG or CACC: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either Encore Capital Group (ECPG) or Credit Acceptance (CACC). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Encore Capital Group and Credit Acceptance are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ECPG is likely seeing its earnings outlook improve to a greater extent. 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.
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.
ECPG currently has a forward P/E ratio of 7.99, while CACC has a forward P/E of 13.88. We also note that ECPG has a PEG ratio of 0.61. 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. CACC currently has a PEG ratio of 0.76.
Another notable valuation metric for ECPG is its P/B ratio of 1.66. 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, CACC has a P/B of 4.22.
Based on these metrics and many more, ECPG holds a Value grade of B, while CACC has a Value grade of C.
ECPG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ECPG is likely the superior value option right now.
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Encore Capital Group Inc (ECPG) : Free Stock Analysis Report
Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
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