CPAY vs. V: Which Stock Is the Better Value Option?

Investors interested in Financial Transaction Services stocks are likely familiar with Corpay (CPAY) and Visa (V). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Corpay is sporting a Zacks Rank of #2 (Buy), while Visa has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CPAY likely has seen a stronger improvement to its earnings outlook than V has recently. But this is only part of the picture 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CPAY currently has a forward P/E ratio of 12.28, while V has a forward P/E of 23.91. We also note that CPAY has a PEG ratio of 0.87. 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. V currently has a PEG ratio of 1.76.

Another notable valuation metric for CPAY is its P/B ratio of 5.66. 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, V has a P/B of 14.59.

These are just a few of the metrics contributing to CPAY's Value grade of B and V's Value grade of D.

CPAY has seen stronger estimate revision activity and sports more attractive valuation metrics than V, so it seems like value investors will conclude that CPAY is the superior option right now.

Zacks' Research Chief Picks Stock Most Likely to "At Least Double"

Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.

See Our Top Stock to Double (Plus 4 Runners Up) >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Corpay, Inc. (CPAY): Free Stock Analysis Report

Visa Inc. (V): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research