Investors with an interest in Internet - Software stocks have likely encountered both VNET Group (VNET) and Braze, Inc. (BRZE). But which of these two companies is the best option for those looking for undervalued stocks? 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.
VNET Group has a Zacks Rank of #2 (Buy), while Braze, Inc. has a Zacks Rank of #4 (Sell) right now. This means that VNET's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
VNET currently has a forward P/E ratio of 92.72, while BRZE has a forward P/E of 145.57. We also note that VNET has a PEG ratio of 1.70. 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. BRZE currently has a PEG ratio of 4.85.
Another notable valuation metric for VNET is its P/B ratio of 2.62. 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, BRZE has a P/B of 5.93.
These metrics, and several others, help VNET earn a Value grade of B, while BRZE has been given a Value grade of F.
VNET has seen stronger estimate revision activity and sports more attractive valuation metrics than BRZE, so it seems like value investors will conclude that VNET is the superior option right now.
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VNET Group, Inc. - Unsponsored ADR (VNET): Free Stock Analysis Report Braze, Inc. (BRZE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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