Investors interested in stocks from the Internet - Software sector have probably already heard of Oddity Tech (ODD) and BlackLine (BL). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Oddity Tech has a Zacks Rank of #1 (Strong Buy), while BlackLine has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ODD is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ODD currently has a forward P/E ratio of 14.54, while BL has a forward P/E of 24.52. We also note that ODD has a PEG ratio of 1.22. 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. BL currently has a PEG ratio of 4.98.
Another notable valuation metric for ODD is its P/B ratio of 5.15. 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, BL has a P/B of 10.84.
These metrics, and several others, help ODD earn a Value grade of B, while BL has been given a Value grade of D.
ODD sticks out from BL in both our Zacks Rank and Style Scores models, so value investors will likely feel that ODD is the better option right now.
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Free: See Our Top Stock And 4 Runners UpODDITY Tech Ltd. (ODD) : Free Stock Analysis Report
BlackLine (BL) : 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.
