STNE or INFA: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Internet - Software sector might want to consider either StoneCo Ltd. (STNE) or Informatica Inc. (INFA). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

StoneCo Ltd. has a Zacks Rank of #2 (Buy), while Informatica Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that STNE likely has seen a stronger improvement to its earnings outlook than INFA has recently. 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 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.

STNE currently has a forward P/E ratio of 11.58, while INFA has a forward P/E of 21.90. We also note that STNE has a PEG ratio of 0.46. 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. INFA currently has a PEG ratio of 2.88.

Another notable valuation metric for STNE is its P/B ratio of 2.41. The 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. By comparison, INFA has a P/B of 3.17.

These metrics, and several others, help STNE earn a Value grade of B, while INFA has been given a Value grade of D.

STNE sticks out from INFA in both our Zacks Rank and Style Scores models, so value investors will likely feel that STNE is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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