Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Fidelity National Information Services (FIS) and DLocal (DLO). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Fidelity National Information Services has a Zacks Rank of #2 (Buy), while DLocal has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FIS likely has seen a stronger improvement to its earnings outlook than DLO has recently. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
FIS currently has a forward P/E ratio of 12.44, while DLO has a forward P/E of 15.78. We also note that FIS has a PEG ratio of 1.26. 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. DLO currently has a PEG ratio of 2.15.
Another notable valuation metric for FIS is its P/B ratio of 2.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, DLO has a P/B of 5.25.
These are just a few of the metrics contributing to FIS's Value grade of B and DLO's Value grade of C.
FIS sticks out from DLO in both our Zacks Rank and Style Scores models, so value investors will likely feel that FIS is the better 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
Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report
DLocal Limited (DLO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Comments