YY vs. BCOV: Which Stock Should Value Investors Buy Now?
Investors with an interest in Internet - Content stocks have likely encountered both YY (YY) and Brightcove (BCOV). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
YY has a Zacks Rank of #2 (Buy), while Brightcove has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that YY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
YY currently has a forward P/E ratio of 16.07, while BCOV has a forward P/E of 136.27. We also note that YY has a PEG ratio of 2.63. 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. BCOV currently has a PEG ratio of 9.09.
Another notable valuation metric for YY is its P/B ratio of 0.92. 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, BCOV has a P/B of 4.67.
These are just a few of the metrics contributing to YY's Value grade of B and BCOV's Value grade of D.
YY has seen stronger estimate revision activity and sports more attractive valuation metrics than BCOV, so it seems like value investors will conclude that YY is the superior option right now.
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