ALOT vs. DOCU: Which Stock Is the Better Value Option?
Investors with an interest in Technology Services stocks have likely encountered both AstroNova (ALOT) and DocuSign (DOCU). 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 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, AstroNova has a Zacks Rank of #2 (Buy), while DocuSign has a Zacks Rank of #4 (Sell). This means that ALOT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
ALOT currently has a forward P/E ratio of 60.31, while DOCU has a forward P/E of 447.36. We also note that ALOT has a PEG ratio of 5.03. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DOCU currently has a PEG ratio of 9.89.
Another notable valuation metric for ALOT is its P/B ratio of 0.77. 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, DOCU has a P/B of 86.69.
Based on these metrics and many more, ALOT holds a Value grade of B, while DOCU has a Value grade of F.
ALOT stands above DOCU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ALOT is 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
AstroNova, Inc. (ALOT): Free Stock Analysis Report
DocuSign Inc. (DOCU): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.