Investors with an interest in Internet - Software stocks have likely encountered both Five9 (FIVN) 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Five9 has a Zacks Rank of #2 (Buy), while F5 Networks has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FIVN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
FIVN currently has a forward P/E ratio of 8.26, while FFIV has a forward P/E of 16.84. We also note that FIVN has a PEG ratio of 0.49. 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. FFIV currently has a PEG ratio of 2.38.
Another notable valuation metric for FIVN is its P/B ratio of 2.60. 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, FFIV has a P/B of 4.30.
These are just a few of the metrics contributing to FIVN's Value grade of B and FFIV's Value grade of D.
FIVN stands above FFIV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FIVN is the superior value option right now.
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Today, See These 5 Potential Home Runs >>Five9, Inc. (FIVN) : Free Stock Analysis Report
F5, Inc. (FFIV) : 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.
