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EVTC or EFX: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Financial Transaction Services sector might want to consider either Evertec (EVTC - Free Report) or 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 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.

Currently, Evertec has a Zacks Rank of #1 (Strong Buy), while Equifax has a Zacks Rank of #3 (Hold). This means that EVTC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

EVTC currently has a forward P/E ratio of 11, while EFX has a forward P/E of 41.87. We also note that EVTC has a PEG ratio of 1.38. 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. EFX currently has a PEG ratio of 2.05.

Another notable valuation metric for EVTC is its P/B ratio of 4.38. 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 8.05.

Based on these metrics and many more, EVTC holds a Value grade of B, while EFX has a Value grade of D.

EVTC sticks out from EFX in both our Zacks Rank and Style Scores models, so value investors will likely feel that EVTC is the better option right now.


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