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Investors interested in stocks from the Technology Services sector have probably already heard of AstroNova (ALOT) and Thomson Reuters (TRI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
AstroNova and Thomson Reuters are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ALOT'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 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ALOT currently has a forward P/E ratio of 35.10, while TRI has a forward P/E of 52.25. We also note that ALOT has a PEG ratio of 2.92. 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. TRI currently has a PEG ratio of 4.34.
Another notable valuation metric for ALOT is its P/B ratio of 1.34. 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, TRI has a P/B of 3.32.
These are just a few of the metrics contributing to ALOT's Value grade of B and TRI's Value grade of C.
ALOT has seen stronger estimate revision activity and sports more attractive valuation metrics than TRI, so it seems like value investors will conclude that ALOT is the superior option right now.
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AstroNova, Inc. (ALOT) : Free Stock Analysis Report
Thomson Reuters Corp (TRI) : Free Stock Analysis Report
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