Investors with an interest in Computer- Storage Devices stocks have likely encountered both Teradata (TDC) and Pure Storage (PSTG). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, Teradata is sporting a Zacks Rank of #1 (Strong Buy), while Pure Storage has a Zacks Rank of #3 (Hold). This means that TDC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
TDC currently has a forward P/E ratio of 11.11, while PSTG has a forward P/E of 39.19. We also note that TDC has a PEG ratio of 2.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PSTG currently has a PEG ratio of 2.33.
Another notable valuation metric for TDC is its P/B ratio of 11.32. 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, PSTG has a P/B of 19.23.
Based on these metrics and many more, TDC holds a Value grade of B, while PSTG has a Value grade of D.
TDC sticks out from PSTG in both our Zacks Rank and Style Scores models, so value investors will likely feel that TDC is the better option right now.
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Teradata Corporation (TDC): Free Stock Analysis Report Pure Storage, Inc. (PSTG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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