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SYF vs. SOFI: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Synchrony (SYF - Free Report) or SoFi Technologies, Inc. (SOFI - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Synchrony has a Zacks Rank of #2 (Buy), while SoFi Technologies, Inc. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SYF is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 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.
SYF currently has a forward P/E ratio of 7.31, while SOFI has a forward P/E of 52.08. We also note that SYF has a PEG ratio of 0.63. 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. SOFI currently has a PEG ratio of 1.95.
Another notable valuation metric for SYF is its P/B ratio of 1.42. 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, SOFI has a P/B of 2.27.
These metrics, and several others, help SYF earn a Value grade of A, while SOFI has been given a Value grade of F.
SYF has seen stronger estimate revision activity and sports more attractive valuation metrics than SOFI, so it seems like value investors will conclude that SYF is the superior option right now.