Investors interested in stocks from the Internet - Software sector have probably already heard of Waystar Holding (WAY) and Autodesk (ADSK). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Waystar Holding has a Zacks Rank of #2 (Buy), while Autodesk has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WAY has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
WAY currently has a forward P/E ratio of 12.77, while ADSK has a forward P/E of 18.62. We also note that WAY has a PEG ratio of 0.73. 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. ADSK currently has a PEG ratio of 1.11.
Another notable valuation metric for WAY is its P/B ratio of 1.02. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ADSK has a P/B of 15.5.
Based on these metrics and many more, WAY holds a Value grade of B, while ADSK has a Value grade of C.
WAY sticks out from ADSK in both our Zacks Rank and Style Scores models, so value investors will likely feel that WAY is the better option right now.
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See Stocks Now >>Waystar Holding Corp. (WAY) : Free Stock Analysis Report
Autodesk, Inc. (ADSK) : 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.
