Investors interested in stocks from the Internet - Software sector have probably already heard of Nice (NICE) and Informatica Inc. (INFA). But which of these two stocks presents investors with the better value opportunity right now? 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.
Nice and Informatica Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that NICE likely has seen a stronger improvement to its earnings outlook than INFA 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.
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 13.76, while INFA has a forward P/E of 21.17. We also note that NICE has a PEG ratio of 1.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. INFA currently has a PEG ratio of 2.79.
Another notable valuation metric for NICE is its P/B ratio of 3.08. 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, INFA has a P/B of 3.24.
Based on these metrics and many more, NICE holds a Value grade of B, while INFA has a Value grade of D.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Nice (NICE): Free Stock Analysis Report Informatica Inc. (INFA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
