Which stocks should value investors buy now?

Investors interested in stocks in the Financials – Consumer Lending sector are probably familiar with Lexinfintech Holdings (LX) and First Cash Financial Services (FCFS). But which of these two stocks is more attractive to value investors? To find out, we need to take a closer look at the two.

We have found that the best way to discover great value opportunities is to combine a strong Zacks Rank with an outstanding grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Lexinfintech Holdings currently has a Zacks Rank of #1 (Strong Buy), while First Cash Financial Services currently has a Zacks Rank of #4 (Sell). Investors should take comfort in the fact that LX’s earnings outlook has likely improved more than FCFS’s has recently. However, for value investors, this is only part of the picture.

Value investors analyze a variety of traditional and proven metrics to find companies that they believe are undervalued at their current price levels.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

LX currently has a forward P/E ratio of 5.61, while FCFS has a forward P/E ratio of 20.75. We also note that LX has a PEG ratio of 0.32. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. FCFS currently has a PEG ratio of 1.38.

Another important valuation metric for LX is its P/B ratio of 2.32. 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. For comparison, FCFS has a P/B of 2.56.

These and several other metrics help LX earn a B rating, while FCFS earns a C rating.

LX currently has an improving earnings outlook, which makes it stand out in our Zacks Rank model. And based on the valuation metrics mentioned above, we believe LX is probably the better value option right now.

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LexinFintech Holdings Ltd. Sponsored ADR (LX): Free Stock Analysis Report

First Cash, Inc. (FCFS): Free Stock Analysis Report

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