Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both PRA Group (PRAA) and Euronet Worldwide (EEFT). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, PRA Group is sporting a Zacks Rank of #2 (Buy), while Euronet Worldwide has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PRAA is likely seeing its earnings outlook improve to a greater extent. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PRAA currently has a forward P/E ratio of 20.37, while EEFT has a forward P/E of 22.57. We also note that PRAA has a PEG ratio of 0.55. 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. EEFT currently has a PEG ratio of 2.26.
Another notable valuation metric for PRAA is its P/B ratio of 1.45. 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, EEFT has a P/B of 5.95.
These are just a few of the metrics contributing to PRAA's Value grade of B and EEFT's Value grade of D.
PRAA sticks out from EEFT in both our Zacks Rank and Style Scores models, so value investors will likely feel that PRAA is the better option right now.
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