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ECPG vs. FCFS: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Financial - Consumer Loans stocks have likely encountered both Encore Capital Group (ECPG) and First Cash Financial Services (FCFS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Encore Capital Group has a Zacks Rank of #2 (Buy), while First Cash Financial Services has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ECPG likely has seen a stronger improvement to its earnings outlook than FCFS has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

ECPG currently has a forward P/E ratio of 6.54, while FCFS has a forward P/E of 25.33. We also note that ECPG has a PEG ratio of 0.44. 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 1.69.

Another notable valuation metric for ECPG is its P/B ratio of 1.27. 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, FCFS has a P/B of 3.20.

Based on these metrics and many more, ECPG holds a Value grade of A, while FCFS has a Value grade of D.

ECPG stands above FCFS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ECPG is the superior value option right now.


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Encore Capital Group Inc (ECPG) : Free Stock Analysis Report
 
First Cash, Inc. (FCFS) : Free Stock Analysis Report
 
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