Investors interested in Business - Services stocks are likely familiar with Core-Mark (CORE) and SPS Commerce (SPSC). 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, both Core-Mark and SPS Commerce are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
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 20.53, while SPSC has a forward P/E of 41.54. We also note that CORE has a PEG ratio of 2.57. 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. SPSC currently has a PEG ratio of 2.77.
Another notable valuation metric for CORE is its P/B ratio of 2.61. 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, SPSC has a P/B of 4.98.
These are just a few of the metrics contributing to CORE's Value grade of B and SPSC's Value grade of D.
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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