Investors looking for stocks in the Business - Services sector might want to consider either Core-Mark (CORE) or SPS Commerce (SPSC). 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.
Currently, both Core-Mark and SPS Commerce are holding a Zacks Rank of # 1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
CORE currently has a forward P/E ratio of 30.72, while SPSC has a forward P/E of 54.28. We also note that CORE has a PEG ratio of 2.36. 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. SPSC currently has a PEG ratio of 2.71.
Another notable valuation metric for CORE is its P/B ratio of 3.32. 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, SPSC has a P/B of 5.26.
These are just a few of the metrics contributing to CORE's Value grade of B and SPSC's Value grade of F.
Both CORE and SPSC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CORE is the superior value option right now.
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Core-Mark Holding Company, Inc. (CORE) : Free Stock Analysis Report
SPS Commerce, Inc. (SPSC) : Free Stock Analysis Report
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