Investors interested in Financial - Consumer Loans stocks are likely familiar with Santander (MC:SAN) Consumer (SC) and First Cash Financial Services (FCFS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Santander Consumer has a Zacks Rank of #2 (Buy), while First Cash Financial Services has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SC likely has seen a stronger improvement to its earnings outlook than FCFS has recently. But this is just one piece of the puzzle 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SC currently has a forward P/E ratio of 9.27, while FCFS has a forward P/E of 24.61. We also note that SC has a PEG ratio of 0.77. 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. FCFS currently has a PEG ratio of 1.64.
Another notable valuation metric for SC is its P/B ratio of 1.23. 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, FCFS has a P/B of 3.11.
Based on these metrics and many more, SC holds a Value grade of A, while FCFS has a Value grade of C.
SC sticks out from FCFS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SC is the better option right now.
Santander Consumer USA Holdings Inc. (SC): Free Stock Analysis Report
First Cash, Inc. (FCFS): Free Stock Analysis Report
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