IX or AXP: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Orix (IX) and American Express (AXP). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Orix is sporting a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IX has an improving earnings outlook. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
IX currently has a forward P/E ratio of 9.82, while AXP has a forward P/E of 19.96. We also note that IX has a PEG ratio of 0.40. 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. AXP currently has a PEG ratio of 1.72.
Another notable valuation metric for IX is its P/B ratio of 0.89. 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, AXP has a P/B of 6.83.
Based on these metrics and many more, IX holds a Value grade of A, while AXP has a Value grade of C.
IX stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IX is the superior value option right now.
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