Investors looking for stocks in the Financial – Miscellaneous Services sector might want to consider either Intercorp Financial Services Inc. (IFS) or HA Sustainable Infrastructure Capital (HASI). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Intercorp Financial Services Inc. has a Zacks Rank of #2 (Buy), while HA Sustainable Infrastructure Capital has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that IFS likely has seen a stronger improvement to its earnings outlook than HASI has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
IFS currently has a forward P/E ratio of 9.18, while HASI has a forward P/E of 12.82. We also note that IFS has a PEG ratio of 0.40. 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. HASI currently has a PEG ratio of 1.11.
Another notable valuation metric for IFS is its P/B ratio of 1.64. 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, HASI has a P/B of 1.8.
These are just a few of the metrics contributing to IFS’s Value grade of B and HASI’s Value grade of D.
IFS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that IFS is likely the superior value option right now.
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