Investors interested in stocks from the Technology Services sector have probably already heard of Acuity (AYI) and Amplitude, Inc. (AMPL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Acuity and Amplitude, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AYI has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
AYI currently has a forward P/E ratio of 17.30, while AMPL has a forward P/E of 150.46. We also note that AYI has a PEG ratio of 1.73. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMPL currently has a PEG ratio of 3.63.
Another notable valuation metric for AYI is its P/B ratio of 3.84. 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, AMPL has a P/B of 5.06.
These metrics, and several others, help AYI earn a Value grade of B, while AMPL has been given a Value grade of F.
AYI stands above AMPL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AYI is the superior value option right now.
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Acuity, Inc. (AYI): Free Stock Analysis Report Amplitude, Inc. (AMPL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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