Yahoo Finance GPN vs. MA: Which Stock Should Value Investors Buy Now?
Investors interested in Financial Transaction Services stocks are likely familiar with Global Payments (GPN) and MasterCard (MA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Global Payments has a Zacks Rank of #2 (Buy), while MasterCard has a Zacks Rank of #3 (Hold) 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. However, value investors will care about much more than just this.
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 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 9.14, while MA has a forward P/E of 32.08. We also note that GPN has a PEG ratio of 0.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MA currently has a PEG ratio of 1.79.
Another notable valuation metric for GPN is its P/B ratio of 1.19. 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 58.25.
These metrics, and several others, help GPN earn a Value grade of A, while MA has been given a Value grade of D.
GPN stands above MA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GPN is the superior value option right now.
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Global Payments Inc. (GPN) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report
