SNX vs. TYL: Which Stock Is the Better Value Option?
Investors with an interest in Business - Software Services stocks have likely encountered both Synnex (SNX) and Tyler Technologies (TYL). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Synnex has a Zacks Rank of #1 (Strong Buy), while Tyler Technologies has a Zacks Rank of #3 (Hold) right now. This means that SNX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
SNX currently has a forward P/E ratio of 12.15, while TYL has a forward P/E of 73.49. We also note that SNX has a PEG ratio of 1.30. 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. TYL currently has a PEG ratio of 4.90.
Another notable valuation metric for SNX is its P/B ratio of 1.87. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TYL has a P/B of 8.77.
Based on these metrics and many more, SNX holds a Value grade of B, while TYL has a Value grade of D.
SNX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SNX is likely the superior value option right now.
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SYNNEX Corporation (SNX): Free Stock Analysis Report
Tyler Technologies, Inc. (TYL): 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.