Investors looking for stocks in the Internet - Software sector might want to consider either 8x8 (EGHT) or TEMENOS GROUP (TMSNY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, 8x8 is sporting a Zacks Rank of #2 (Buy), while TEMENOS GROUP has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that EGHT likely has seen a stronger improvement to its earnings outlook than TMSNY has recently. 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.
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.
EGHT currently has a forward P/E ratio of 6.03, while TMSNY has a forward P/E of 18.61. We also note that EGHT has a PEG ratio of 0.85. 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. TMSNY currently has a PEG ratio of 1.82.
Another notable valuation metric for EGHT is its P/B ratio of 2.05. 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, TMSNY has a P/B of 16.33.
These metrics, and several others, help EGHT earn a Value grade of A, while TMSNY has been given a Value grade of C.
EGHT stands above TMSNY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EGHT is the superior value option right now.
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TEMENOS GROUP (TMSNY) : 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.
