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SYF vs. VIRT: Which Stock Is the Better Value Option?

Zacks Equity Research
Enova International (ENVA) closed at $21.21 in the latest trading session, marking a -0.33% move from the prior day.

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 stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Synchrony and Virtu Financial are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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. But this is just one factor that value investors are interested in.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SYF currently has a forward P/E ratio of 6.94, while VIRT has a forward P/E of 15.55. We also note that SYF has a PEG ratio of 0.66. 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. VIRT currently has a PEG ratio of 3.11.

Another notable valuation metric for SYF is its P/B ratio of 1.53. 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, VIRT has a P/B of 3.54.

Based on these metrics and many more, SYF holds a Value grade of A, while VIRT has a 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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