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FI vs. EFX: Which Stock Should Value Investors Buy Now?
Investors with an interest in Financial Transaction Services stocks have likely encountered both Fiserv (FI - Free Report) and Equifax (EFX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Fiserv has a Zacks Rank of #2 (Buy), while Equifax has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FI likely has seen a stronger improvement to its earnings outlook than EFX has recently. But this is only part of the picture for value investors.
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 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.
FI currently has a forward P/E ratio of 15.40, while EFX has a forward P/E of 29.09. We also note that FI has a PEG ratio of 1.15. 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. EFX currently has a PEG ratio of 2.38.
Another notable valuation metric for FI is its P/B ratio of 2.62. 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, EFX has a P/B of 6.66.
Based on these metrics and many more, FI holds a Value grade of B, while EFX has a Value grade of C.
FI has seen stronger estimate revision activity and sports more attractive valuation metrics than EFX, so it seems like value investors will conclude that FI is the superior option right now.