Investors interested in Technology Services stocks are likely familiar with Acuity (AYI) and Nomura Research Institute (NRILY). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Acuity and Nomura Research Institute are sporting a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AYI currently has a forward P/E ratio of 13.39, while NRILY has a forward P/E of 22.78. We also note that AYI has a PEG ratio of 1.34. 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. NRILY currently has a PEG ratio of 1.83.
Another notable valuation metric for AYI is its P/B ratio of 2.91. 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, NRILY has a P/B of 4.81.
Based on these metrics and many more, AYI holds a Value grade of B, while NRILY has a Value grade of C.
Both AYI and NRILY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AYI is the superior value option right now.
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Nomura Research Institute (NRILY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
