Investors interested in Internet - Software stocks are likely familiar with Five9 (FIVN) and Adyen N.V. Unsponsored ADR (ADYEY). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Five9 and Adyen N.V. Unsponsored ADR are sporting a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 8.42, while ADYEY has a forward P/E of 44.03. We also note that FIVN has a PEG ratio of 0.63. 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 2.38.
Another notable valuation metric for FIVN is its P/B ratio of 2.62. 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, ADYEY has a P/B of 10.19.
These are just a few of the metrics contributing to FIVN's Value grade of B and ADYEY's Value grade of F.
Both FIVN and ADYEY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FIVN is the superior value option right now.
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Five9, Inc. (FIVN): Free Stock Analysis Report Adyen N.V. Unsponsored ADR (ADYEY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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