Investors interested in stocks from the Internet - Software sector have probably already heard of Nice (NICE) and VERRA MOBILITY CORP (VRRM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Nice has a Zacks Rank of #2 (Buy), while VERRA MOBILITY CORP has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NICE likely has seen a stronger improvement to its earnings outlook than VRRM has recently. However, value investors will care about much more than just this.
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.
NICE currently has a forward P/E ratio of 13.38, while VRRM has a forward P/E of 18.04. We also note that NICE has a PEG ratio of 1.21. 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. VRRM currently has a PEG ratio of 2.04.
Another notable valuation metric for NICE is its P/B ratio of 2.99. 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, VRRM has a P/B of 12.57.
These are just a few of the metrics contributing to NICE's Value grade of B and VRRM's Value grade of C.
NICE is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NICE is likely the superior value option right now.
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Nice (NICE): Free Stock Analysis Report VERRA MOBILITY CORP (VRRM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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