Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Synchrony (SYF) or 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Synchrony has a Zacks Rank of #2 (Buy), while Virtu Financial has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SYF is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SYF currently has a forward P/E ratio of 8.35, while VIRT has a forward P/E of 14.30. We also note that SYF has a PEG ratio of 1.09. 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. VIRT currently has a PEG ratio of 2.86.
Another notable valuation metric for SYF is its P/B ratio of 1.67. 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, VIRT has a P/B of 2.96.
These metrics, and several others, help SYF earn a Value grade of A, while VIRT has been given a Value grade of D.
SYF stands above VIRT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SYF is the superior value option right now.
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Synchrony Financial (SYF) : Free Stock Analysis Report
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