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VIRT or AXP: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Virtu FinancialVIRT-- (VIRT) and American ExpressAXP-- (AXP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Virtu Financial has a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold). This means that VIRT'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
VIRT currently has a forward P/E ratio of 8.67, while AXPAXP-- has a forward P/E of 18.36. We also note that VIRTVIRT-- has a PEG ratio of 0.37. 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. AXP currently has a PEG ratio of 1.38.
Another notable valuation metric for VIRT is its P/B ratio of 4.06. 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, AXP has a P/B of 6.4.
These are just a few of the metrics contributing to VIRT's Value grade of B and AXP's Value grade of C.
VIRT stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIRT is the superior value option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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