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GL or EEFT: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Globe Life (GL) or Euronet Worldwide (EEFT). 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.

Globe Life and Euronet Worldwide are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GL likely has seen a stronger improvement to its earnings outlook than EEFT has recently. But this is only part of the picture for value investors.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GL currently has a forward P/E ratio of 14.39, while EEFT has a forward P/E of 20.04. We also note that GL has a PEG ratio of 1.78. 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. EEFT currently has a PEG ratio of 2.

Another notable valuation metric for GL is its P/B ratio of 1.60. 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, EEFT has a P/B of 5.28.

These are just a few of the metrics contributing to GL's Value grade of B and EEFT's Value grade of D.

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


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Zacks Investment Research