Investors interested in Internet - Software stocks are likely familiar with Bumble Inc. (BMBL) and F5 Networks (FFIV). But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Bumble Inc. and F5 Networks are sporting a Zacks Rank of #1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
BMBL currently has a forward P/E ratio of 7.22, while FFIV has a forward P/E of 20.89. We also note that BMBL has a PEG ratio of 0.25. 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. FFIV currently has a PEG ratio of 2.93.
Another notable valuation metric for BMBL is its P/B ratio of 0.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FFIV has a P/B of 5.27.
These are just a few of the metrics contributing to BMBL's Value grade of A and FFIV's Value grade of F.
Both BMBL and FFIV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BMBL is the superior value option right now.
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Bumble Inc. (BMBL): Free Stock Analysis Report F5, Inc. (FFIV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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