Investors looking for stocks in the Business - Services sector might want to consider either Concentrix Corporation (CNXC) or UL Solutions Inc. (ULS). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.
Concentrix Corporation and UL Solutions Inc. are both sporting a Zacks Rank of #2 (Buy) right now. 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.
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.
CNXC currently has a forward P/E ratio of 2.59, while ULS has a forward P/E of 37.27. We also note that CNXC has a PEG ratio of 0.30. 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. ULS currently has a PEG ratio of 3.04.
Another notable valuation metric for CNXC is its P/B ratio of 0.69. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ULS has a P/B of 12.53.
Based on these metrics and many more, CNXC holds a Value grade of A, while ULS has a Value grade of D.
Both CNXC and ULS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CNXC is the superior value option right now.
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Concentrix Corporation (CNXC): Free Stock Analysis Report UL Solutions Inc. (ULS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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