Investors with an interest in Internet - Software stocks have likely encountered both Bumble Inc. (BMBL) and Autodesk (ADSK). 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 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.
Right now, Bumble Inc. is sporting a Zacks Rank of #2 (Buy), while Autodesk has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BMBL likely has seen a stronger improvement to its earnings outlook than ADSK has recently. But this is just one piece of the puzzle 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.
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.
BMBL currently has a forward P/E ratio of 3.36, while ADSK has a forward P/E of 29.72. We also note that BMBL has a PEG ratio of 0.10. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ADSK currently has a PEG ratio of 1.82.
Another notable valuation metric for BMBL is its P/B ratio of 0.44. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ADSK has a P/B of 23.13.
These metrics, and several others, help BMBL earn a Value grade of A, while ADSK has been given a Value grade of D.
BMBL stands above ADSK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BMBL is the superior value option right now.
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Bumble Inc. (BMBL): Free Stock Analysis Report Autodesk, Inc. (ADSK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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