WU or V: Which Is the Better Value Stock Right Now?
Investors with an interest in Financial Transaction Services stocks have likely encountered both Western Union (WU) and Visa (V). 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 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.
Both Western Union and Visa have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.
WU currently has a forward P/E ratio of 6.76, while V has a forward P/E of 27.71. We also note that WU has a PEG ratio of 1.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. V currently has a PEG ratio of 1.94.
Another notable valuation metric for WU is its P/B ratio of 9.14. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, V has a P/B of 13.08.
These are just a few of the metrics contributing to WU's Value grade of A and V's Value grade of D.
Both WU and V are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WU is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Western Union Company (WU) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report