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from the world of economics and financeInvestors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Inter & Co. Inc. (INTR) or American Express (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 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, Inter & Co. Inc. is sporting a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that INTR likely has seen a stronger improvement to its earnings outlook than AXP has recently. But this is just one factor that value investors are interested in.
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 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.
INTR currently has a forward P/E ratio of 16.08, while AXP has a forward P/E of 21.45. We also note that INTR has a PEG ratio of 0.44. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AXP currently has a PEG ratio of 1.73.
Another notable valuation metric for INTR is its P/B ratio of 2.38. 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, AXP has a P/B of 7.05.
Based on these metrics and many more, INTR holds a Value grade of A, while AXP has a Value grade of C.
INTR stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that INTR is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.