Investors with an interest in Technology Services stocks have likely encountered both Skillsoft Corp. (SKIL) and MeridianLink (MLNK). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Skillsoft Corp. has a Zacks Rank of #1 (Strong Buy), while MeridianLink has a Zacks Rank of #3 (Hold) right now. This means that SKIL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 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.
SKIL currently has a forward P/E ratio of 3.74, while MLNK has a forward P/E of 54.35. We also note that SKIL has a PEG ratio of 0.37. 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. MLNK currently has a PEG ratio of 1.83.
Another notable valuation metric for SKIL is its P/B ratio of 2.63. 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, MLNK has a P/B of 3.92.
These are just a few of the metrics contributing to SKIL's Value grade of A and MLNK's Value grade of D.
SKIL stands above MLNK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SKIL is the superior value option right now.
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Skillsoft Corp. (SKIL): Free Stock Analysis Report MeridianLink, Inc. (MLNK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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