Investors with an interest in Internet - Software stocks have likely encountered both F5 Networks (FFIV) and Coupa Software, Inc. (COUP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, F5 Networks has a Zacks Rank of #2 (Buy), while Coupa Software, Inc. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FFIV is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
FFIV currently has a forward P/E ratio of 16.16, while COUP has a forward P/E of 732.27. We also note that FFIV has a PEG ratio of 1.40. 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. COUP currently has a PEG ratio of 26.35.
Another notable valuation metric for FFIV is its P/B ratio of 4.47. 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, COUP has a P/B of 42.51.
These metrics, and several others, help FFIV earn a Value grade of A, while COUP has been given a Value grade of F.
FFIV 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 FFIV is likely the superior value option right now.
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F5 Networks, Inc. (FFIV): Free Stock Analysis Report
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