NUAN or PEGA: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Computer - Software sector might want to consider either Nuance Communications (NUAN) or Pegasystems (PEGA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Nuance Communications has a Zacks Rank of #2 (Buy), while Pegasystems has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that NUAN likely has seen a stronger improvement to its earnings outlook than PEGA has recently. 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.
NUAN currently has a forward P/E ratio of 14.23, while PEGA has a forward P/E of 725.20. We also note that NUAN has a PEG ratio of 2.85. 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. PEGA currently has a PEG ratio of 90.65.
Another notable valuation metric for NUAN is its P/B ratio of 2.33. 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, PEGA has a P/B of 9.73.
Based on these metrics and many more, NUAN holds a Value grade of B, while PEGA has a Value grade of F.
NUAN sticks out from PEGA in both our Zacks Rank and Style Scores models, so value investors will likely feel that NUAN is the better option right now.
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