NAVI vs. FCFS: Which Stock Is the Better Value Option?
Investors interested in Financial - Consumer Loans stocks are likely familiar with Navient (NAVI) and First Cash Financial Services (FCFS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Navient and First Cash Financial Services are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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.
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.
NAVI currently has a forward P/E ratio of 6.97, while FCFS has a forward P/E of 26.88. We also note that NAVI has a PEG ratio of 1.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FCFS currently has a PEG ratio of 1.34.
Another notable valuation metric for NAVI is its P/B ratio of 0.93. 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 3.09.
These are just a few of the metrics contributing to NAVI's Value grade of B and FCFS's Value grade of D.
Both NAVI and FCFS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NAVI is the superior value option right now.
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