Investors with an interest in Computer - Integrated Systems stocks have likely encountered both Hewlett Packard Enterprise (HPE) and ZoomInfo (ZI). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Hewlett Packard Enterprise has a Zacks Rank of #2 (Buy), while ZoomInfo 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 HPE has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
HPE currently has a forward P/E ratio of 10.18, while ZI has a forward P/E of 10.97. We also note that HPE has a PEG ratio of 1.75. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZI currently has a PEG ratio of 8.41.
Another notable valuation metric for HPE is its P/B ratio of 1.12. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ZI has a P/B of 2.11.
These are just a few of the metrics contributing to HPE's Value grade of A and ZI's Value grade of C.
HPE has seen stronger estimate revision activity and sports more attractive valuation metrics than ZI, so it seems like value investors will conclude that HPE is the superior option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
