Investors interested in Technology Services stocks are likely familiar with Blucora (BCOR) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Blucora has a Zacks Rank of #1 (Strong Buy), while Thomson Reuters 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 BCOR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
BCOR currently has a forward P/E ratio of 14.72, while TRI has a forward P/E of 57.32. We also note that BCOR has a PEG ratio of 0.74. 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. TRI currently has a PEG ratio of 6.37.
Another notable valuation metric for BCOR is its P/B ratio of 2.32. 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 3.56.
These metrics, and several others, help BCOR earn a Value grade of B, while TRI has been given a Value grade of D.
BCOR sticks out from TRI in both our Zacks Rank and Style Scores models, so value investors will likely feel that BCOR is the better option right now.
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Blucora, Inc. (BCOR) : Free Stock Analysis Report
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