Investors interested in stocks from the Financial – Miscellaneous Services sector have probably already heard of Intercorp Financial Services Inc. (IFS) and Grupo Financiero Banorte SAB de CV (GBOOY). 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 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.
Intercorp Financial Services Inc. and Grupo Financiero Banorte SAB de CV 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 IFS 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
IFS currently has a forward P/E ratio of 6.27, while GBOOY has a forward P/E of 9.20. We also note that IFS has a PEG ratio of 0.42. 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. GBOOY currently has a PEG ratio of 0.64.
Another notable valuation metric for IFS is its P/B ratio of 1.12. 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, GBOOY has a P/B of 1.59.
These metrics, and several others, help IFS earn a Value grade of A, while GBOOY has been given a Value grade of C.
IFS sticks out from GBOOY in both our Zacks Rank and Style Scores models, so value investors will likely feel that IFS is the better 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
Intercorp Financial Services Inc. (IFS) : Free Stock Analysis Report
Grupo Financiero Banorte SAB de CV (GBOOY) : Free Stock Analysis Report
To read this article on Zacks.com click here.