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SYF or VIRT: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Synchrony (SYF) and Virtu Financial (VIRT). But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Synchrony is sporting a Zacks Rank of #2 (Buy), while Virtu Financial has a Zacks Rank of #5 (Strong Sell). This means that SYF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SYF currently has a forward P/E ratio of 8, while VIRT has a forward P/E of 13.76. We also note that SYF has a PEG ratio of 1.04. 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. VIRT currently has a PEG ratio of 2.75.

Another notable valuation metric for SYF is its P/B ratio of 1.60. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, VIRT has a P/B of 2.84.

These are just a few of the metrics contributing to SYF's Value grade of A and VIRT's Value grade of F.

SYF sticks out from VIRT in both our Zacks Rank and Style Scores models, so value investors will likely feel that SYF is the better option right now.


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