BFH vs. AXP: Which Stock Is the Better Value Option?
Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Bread Financial Holdings (BFH) and American Express $AXP (AXP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Bread Financial Holdings has a Zacks Rank of #2 (Buy), while American Express has a Zacks Rank of #3 (Hold). This means that BFH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
BFH currently has a forward P/E ratio of 8.48, while AXP has a forward P/E of 18.47. We also note that BFH has a PEG ratio of 1.23. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AXP currently has a PEG ratio of 1.37.
Another notable valuation metric for BFH is its P/B ratio of 1.1. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AXP has a P/B of 6.64.
These metrics, and several others, help BFH earn a Value grade of A, while AXP has been given a Value grade of C.
BFH stands above AXP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BFH is the superior value option right now.
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
SeeWant 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
Bread Financial Holdings, Inc. (BFH): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
