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PRAA vs. EEFT: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either PRA Group (PRAA) or Euronet Worldwide (EEFT). But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, PRA Group is sporting a Zacks Rank of #1 (Strong Buy), while Euronet Worldwide has a Zacks Rank of #3 (Hold). This means that PRAA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 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 14.32, while EEFT has a forward P/E of 16.32. We also note that PRAA has a PEG ratio of 0.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EEFT currently has a PEG ratio of 1.63.

Another notable valuation metric for PRAA is its P/B ratio of 1.43. 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 4.79.

These metrics, and several others, help PRAA earn a Value grade of B, while EEFT has been given a Value grade of C.

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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PRA Group, Inc. (PRAA) : Free Stock Analysis Report
Euronet Worldwide, Inc. (EEFT) : Free Stock Analysis Report
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