Investors interested in Financial – Miscellaneous Services stocks are likely familiar with Piper Sandler Companies (PIPR) and Circle Internet Group, Inc. (CRCL). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Piper Sandler Companies has a Zacks Rank of #1 (Strong Buy), while Circle Internet Group, Inc. has a Zacks Rank of #3 (Hold) right now. This means that PIPR’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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
PIPR currently has a forward P/E ratio of 15.97, while CRCL has a forward P/E of 117.33. We also note that PIPR has a PEG ratio of 1.63. 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. CRCL currently has a PEG ratio of 4.89.
Another notable valuation metric for PIPR is its P/B ratio of 3.3. 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, CRCL has a P/B of 6.46.
These metrics, and several others, help PIPR earn a Value grade of B, while CRCL has been given a Value grade of F.
PIPR has seen stronger estimate revision activity and sports more attractive valuation metrics than CRCL, so it seems like value investors will conclude that PIPR is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).