Investors with an interest in Internet - Software stocks have likely encountered both Five9 (FIVN) and Adyen N.V. Unsponsored ADR (ADYEY). 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 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.
Currently, both Five9 and Adyen N.V. Unsponsored ADR are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
FIVN currently has a forward P/E ratio of 9.96, while ADYEY has a forward P/E of 46.63. We also note that FIVN has a PEG ratio of 0.64. 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. ADYEY currently has a PEG ratio of 2.23.
Another notable valuation metric for FIVN is its P/B ratio of 3.15. 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, ADYEY has a P/B of 14.79.
Based on these metrics and many more, FIVN holds a Value grade of B, while ADYEY has a Value grade of F.
Both FIVN and ADYEY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FIVN is the superior value option right now.
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Five9, Inc. (FIVN): Free Stock Analysis Report Adyen N.V. Unsponsored ADR (ADYEY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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