IFS vs. AXP: Which Stock Should Value Investors Buy Now?

Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Intercorp Financial Services Inc. (IFS) and American Express (AXP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Intercorp Financial Services Inc. and American Express are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that IFS likely has seen a stronger improvement to its earnings outlook than AXP 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.

IFS currently has a forward P/E ratio of 8.99, while AXP has a forward P/E of 18.74. We also note that IFS has a PEG ratio of 0.71. 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. AXP currently has a PEG ratio of 1.34.

Another notable valuation metric for IFS is its P/B ratio of 1.58. 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 6.52.

These are just a few of the metrics contributing to IFS's Value grade of A and AXP's Value grade of C.

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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This article originally published on Zacks Investment Research (zacks.com).

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