Investors interested in Internet - Software stocks are likely familiar with Nice (NICE) and Informatica Inc. (INFA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Nice and Informatica Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that NICE likely has seen a stronger improvement to its earnings outlook than INFA has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
NICE currently has a forward P/E ratio of 15.53, while INFA has a forward P/E of 22.43. We also note that NICE has a PEG ratio of 1.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. INFA currently has a PEG ratio of 2.28.
Another notable valuation metric for NICE is its P/B ratio of 3.02. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, INFA has a P/B of 3.32.
These are just a few of the metrics contributing to NICE's Value grade of B and INFA's Value grade of D.
NICE stands above INFA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NICE is the superior value option right now.
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Today, See These 5 Potential Home Runs >>Nice (NICE) : Free Stock Analysis Report
Informatica Inc. (INFA) : Free Stock Analysis Report
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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.
