CHGG or FFIV: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Internet - Software sector have probably already heard of Chegg (CHGG) and F5 Networks (FFIV). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Chegg is sporting a Zacks Rank of #2 (Buy), while F5 Networks has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CHGG has an improving earnings outlook. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CHGG currently has a forward P/E ratio of 7.93, while FFIV has a forward P/E of 12.41. We also note that CHGG has a PEG ratio of 0.65. 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. FFIV currently has a PEG ratio of 1.22.
Another notable valuation metric for CHGG is its P/B ratio of 0.97. 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, FFIV has a P/B of 3.56.
These metrics, and several others, help CHGG earn a Value grade of A, while FFIV has been given a Value grade of C.
CHGG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CHGG is likely the superior value option right now.
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Chegg, Inc. (CHGG) : Free Stock Analysis Report
F5, Inc. (FFIV) : Free Stock Analysis Report
