Back to top

Image: Bigstock

IFS vs. MCO: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Intercorp Financial Services Inc. (IFS - Free Report) or Moody's (MCO - Free Report) . 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.

Intercorp Financial Services Inc. has a Zacks Rank of #2 (Buy), while Moody's has a Zacks Rank of #3 (Hold) right now. This means that IFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

IFS currently has a forward P/E ratio of 5.91, while MCO has a forward P/E of 34.81. We also note that IFS has a PEG ratio of 0.51. 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. MCO currently has a PEG ratio of 3.16.

Another notable valuation metric for IFS is its P/B ratio of 1.14. 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, MCO has a P/B of 22.10.

Based on these metrics and many more, IFS holds a Value grade of A, while MCO has a Value grade of F.

IFS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that IFS is likely the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Moody's Corporation (MCO) - free report >>

Intercorp Financial Services Inc. (IFS) - free report >>

Published in