Investors interested in Internet - Software stocks are likely familiar with StoneCo Ltd. (STNE) and Informatica Inc. (INFA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
StoneCo Ltd. and Informatica Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, 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 piece of the puzzle for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
STNE currently has a forward P/E ratio of 10.66, while INFA has a forward P/E of 22.08. We also note that STNE has a PEG ratio of 0.35. 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 2.91.
Another notable valuation metric for STNE is its P/B ratio of 2.4. 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, INFA has a P/B of 3.18.
These are just a few of the metrics contributing to STNE's Value grade of B and INFA's Value grade of D.
STNE stands above INFA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STNE is the superior value option right now.
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StoneCo Ltd. (STNE): Free Stock Analysis Report Informatica Inc. (INFA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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