Yahoo Finance GPN vs. MA: Which Stock Is the Better Value Option?
Investors looking for stocks in the Financial Transaction Services sector might want to consider either Global Payments (GPN) or MasterCard (MA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Global Payments and MasterCard are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GPN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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 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.
GPN currently has a forward P/E ratio of 8.40, while MA has a forward P/E of 31.64. We also note that GPN has a PEG ratio of 0.59. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MA currently has a PEG ratio of 1.76.
Another notable valuation metric for GPN is its P/B ratio of 1.09. 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, MA has a P/B of 57.39.
These metrics, and several others, help GPN earn a Value grade of A, while MA has been given a Value grade of D.
GPN has seen stronger estimate revision activity and sports more attractive valuation metrics than MA, so it seems like value investors will conclude that GPN is the superior option right now.
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
Global Payments Inc. (GPN) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report
