FJTSY or NOW: Which Is the Better Value Stock Right Now?
Investors with an interest in Computers - IT Services stocks have likely encountered both Fujitsu Ltd. (FJTSY) and ServiceNow (NOW). 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Fujitsu Ltd. is sporting a Zacks Rank of #2 (Buy), while ServiceNow has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that FJTSY likely has seen a stronger improvement to its earnings outlook than NOW has recently. But this is only part of the picture 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 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.
FJTSY currently has a forward P/E ratio of 21.13, while NOW has a forward P/E of 36.33. We also note that FJTSY has a PEG ratio of 1.12. 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. NOW currently has a PEG ratio of 1.43.
Another notable valuation metric for FJTSY is its P/B ratio of 3.25. 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, NOW has a P/B of 12.23.
These are just a few of the metrics contributing to FJTSY's Value grade of B and NOW's Value grade of D.
FJTSY has seen stronger estimate revision activity and sports more attractive valuation metrics than NOW, so it seems like value investors will conclude that FJTSY is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
