Investors with an interest in Financial - Consumer Loans stocks have likely encountered both Santander Consumer (SC) 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Santander Consumer is sporting a Zacks Rank of #2 (Buy), while First Cash Financial Services has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that SC likely has seen a stronger improvement to its earnings outlook than FCFS has recently. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
SC currently has a forward P/E ratio of 10.02, while FCFS has a forward P/E of 25.42. We also note that SC has a PEG ratio of 1.43. 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. FCFS currently has a PEG ratio of 1.69.
Another notable valuation metric for SC is its P/B ratio of 1.35. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FCFS has a P/B of 3.26.
These are just a few of the metrics contributing to SC's Value grade of A and FCFS's Value grade of C.
SC stands above FCFS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SC is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Santander Consumer USA Holdings Inc. (SC) : Free Stock Analysis Report
First Cash, Inc. (FCFS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research