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FIS or EFX: Which Is the Better Value Stock Right Now?

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Investors interested in Financial Transaction Services stocks are likely familiar with Fidelity National Information Services (FIS - Free Report) and Equifax (EFX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Fidelity National Information Services and Equifax are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that FIS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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.

FIS currently has a forward P/E ratio of 16.78, while EFX has a forward P/E of 36.76. We also note that FIS has a PEG ratio of 0.73. 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. EFX currently has a PEG ratio of 2.52.

Another notable valuation metric for FIS is its P/B ratio of 2.85. 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, EFX has a P/B of 6.78.

These metrics, and several others, help FIS earn a Value grade of B, while EFX has been given a Value grade of C.

FIS 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 FIS is likely the superior value option right now.


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Fidelity National Information Services, Inc. (FIS) - free report >>

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