Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Orix (IX) or Standard Life PLC Unsponsored ADR (SLFPY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, Orix is sporting a Zacks Rank of #2 (Buy), while Standard Life PLC Unsponsored ADR has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that IX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 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.
IX currently has a forward P/E ratio of 6.11, while SLFPY has a forward P/E of 11.16. We also note that IX has a PEG ratio of 0.85. 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. SLFPY currently has a PEG ratio of 15.95.
Another notable valuation metric for IX is its P/B ratio of 0.71. 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, SLFPY has a P/B of 0.72.
These metrics, and several others, help IX earn a Value grade of A, while SLFPY has been given a Value grade of C.
IX 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 IX is likely the superior value option right now.
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