Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either Navient (NAVI) or Credit Acceptance (CACC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Currently, Navient has a Zacks Rank of #2 (Buy), while Credit Acceptance 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 NAVI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
NAVI currently has a forward P/E ratio of 4.73, while CACC has a forward P/E of 20.56. We also note that NAVI has a PEG ratio of 0.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CACC currently has a PEG ratio of 1.87.
Another notable valuation metric for NAVI is its P/B ratio of 0.93. 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 3.54.
Based on these metrics and many more, NAVI holds a Value grade of A, while CACC has a Value grade of D.
NAVI stands above CACC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NAVI is the superior value option right now.
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Navient Corporation (NAVI) : Free Stock Analysis Report
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