Investors interested in Internet - Software stocks are likely familiar with Five9 (FIVN) and F5 Networks (FFIV). 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Five9 has a Zacks Rank of #2 (Buy), while F5 Networks has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FIVN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
FIVN currently has a forward P/E ratio of 7.20, while FFIV has a forward P/E of 17.08. We also note that FIVN has a PEG ratio of 0.44. 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. FFIV currently has a PEG ratio of 6.35.
Another notable valuation metric for FIVN is its P/B ratio of 2.1. 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, FFIV has a P/B of 4.1.
These metrics, and several others, help FIVN earn a Value grade of A, while FFIV has been given a Value grade of F.
FIVN stands above FFIV 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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Five9, Inc. (FIVN): Free Stock Analysis Report F5, Inc. (FFIV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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