BILL or FFIV: Which Is the Better Value Stock Right Now?
Investors with an interest in Internet - Software stocks have likely encountered both BILL Holdings (BILL) and F5 Networks (FFIV). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, BILL Holdings has a Zacks Rank of #1 (Strong Buy), while F5 Networks has a Zacks Rank of #3 (Hold). This means that BILL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
BILL currently has a forward P/E ratio of 12.61, while FFIV has a forward P/E of 26.18. We also note that BILL has a PEG ratio of 0.42. 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. FFIV currently has a PEG ratio of 3.49.
Another notable valuation metric for BILL is its P/B ratio of 1.31. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FFIV has a P/B of 6.63.
Based on these metrics and many more, BILL holds a Value grade of B, while FFIV has a Value grade of D.
BILL stands above FFIV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BILL is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
