ZIXI vs. PANW: Which Stock Is the Better Value Option?
Investors interested in stocks from the Security sector have probably already heard of Zix (ZIXI) and Palo Alto Networks (PANW). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Zix has a Zacks Rank of #2 (Buy), while Palo Alto Networks 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 ZIXI 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 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.
ZIXI currently has a forward P/E ratio of 11.25, while PANW has a forward P/E of 51.86. We also note that ZIXI has a PEG ratio of 0.75. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PANW currently has a PEG ratio of 2.22.
Another notable valuation metric for ZIXI is its P/B ratio of 9.79. 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, PANW has a P/B of 33.27.
These are just a few of the metrics contributing to ZIXI's Value grade of B and PANW's Value grade of D.
ZIXI sticks out from PANW in both our Zacks Rank and Style Scores models, so value investors will likely feel that ZIXI is the better option right now.
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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.