Yahoo Finance FI vs. MA: Which Stock Is the Better Value Option?
Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Fiserv (FI) and MasterCard (MA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Fiserv is sporting a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FI likely has seen a stronger improvement to its earnings outlook than MA has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
FI currently has a forward P/E ratio of 17.95, while MA has a forward P/E of 32.22. We also note that FI has a PEG ratio of 1.26. 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. MA currently has a PEG ratio of 1.76.
Another notable valuation metric for FI is its P/B ratio of 3.10. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MA has a P/B of 61.92.
These metrics, and several others, help FI earn a Value grade of B, while MA has been given a Value grade of D.
FI has seen stronger estimate revision activity and sports more attractive valuation metrics than MA, so it seems like value investors will conclude that FI is the superior option right now.
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Fiserv, Inc. (FI) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report
