Investors interested in stocks from the Internet - Software sector have probably already heard of VTEX (VTEX) and Braze, Inc. (BRZE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, VTEX has a Zacks Rank of #2 (Buy), while Braze, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VTEX likely has seen a stronger improvement to its earnings outlook than BRZE has recently. But this is just one factor that value investors are interested in.
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.
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.
VTEX currently has a forward P/E ratio of 21.33, while BRZE has a forward P/E of 35.65. We also note that VTEX has a PEG ratio of 0.57. 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. BRZE currently has a PEG ratio of 1.19.
Another notable valuation metric for VTEX is its P/B ratio of 2.9. 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, BRZE has a P/B of 4.06.
Based on these metrics and many more, VTEX holds a Value grade of B, while BRZE has a Value grade of F.
VTEX stands above BRZE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VTEX is the superior value option right now.
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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.
