Investors interested in Internet - Software stocks are likely familiar with ZoomInfo (GTM) 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.
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, ZoomInfo is sporting a Zacks Rank of #2 (Buy), while Autodesk has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GTM 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 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GTM currently has a forward P/E ratio of 9.78, while ADSK has a forward P/E of 30.89. We also note that GTM has a PEG ratio of 1.10. 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. ADSK currently has a PEG ratio of 2.
Another notable valuation metric for GTM is its P/B ratio of 1.93. 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 24.03.
These metrics, and several others, help GTM earn a Value grade of B, while ADSK has been given a Value grade of F.
GTM sticks out from ADSK in both our Zacks Rank and Style Scores models, so value investors will likely feel that GTM is the better option right now.
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ZoomInfo Technologies Inc. (GTM): Free Stock Analysis Report Autodesk, Inc. (ADSK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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