FIVN or ADYEY: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Internet - Software sector might want to consider either Five9 (FIVN) or Adyen N.V. Unsponsored ADR (ADYEY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Five9 and Adyen N.V. Unsponsored ADR are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that FIVN likely has seen a stronger improvement to its earnings outlook than ADYEY has recently. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

FIVN currently has a forward P/E ratio of 7.48, while ADYEY has a forward P/E of 43.41. We also note that FIVN has a PEG ratio of 0.56. 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. ADYEY currently has a PEG ratio of 2.37.

Another notable valuation metric for FIVN is its P/B ratio of 2.32. 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, ADYEY has a P/B of 10.05.

These metrics, and several others, help FIVN earn a Value grade of B, while ADYEY has been given a Value grade of F.

FIVN stands above ADYEY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FIVN is the superior value option right now.

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

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