Investors interested in stocks from the Internet - Software sector have probably already heard of Five9 (FIVN) and Autodesk (ADSK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Five9 and Autodesk are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
FIVN currently has a forward P/E ratio of 9.01, while ADSK has a forward P/E of 31.39. We also note that FIVN has a PEG ratio of 0.64. 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. ADSK currently has a PEG ratio of 1.99.
Another notable valuation metric for FIVN is its P/B ratio of 2.7. 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, ADSK has a P/B of 24.74.
Based on these metrics and many more, FIVN holds a Value grade of B, while ADSK has a Value grade of F.
Both FIVN and ADSK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FIVN is the superior value option right now.
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Five9, Inc. (FIVN): Free Stock Analysis Report Autodesk, Inc. (ADSK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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