Investors with an interest in Business - Services stocks have likely encountered both Core-Mark (CORE) and 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Core-Mark has a Zacks Rank of #2 (Buy), while SPS Commerce has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CORE has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 14.51, while SPSC has a forward P/E of 40.72. We also note that CORE has a PEG ratio of 1.81. 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 2.71.
Another notable valuation metric for CORE is its P/B ratio of 2. 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 5.63.
These are just a few of the metrics contributing to CORE's Value grade of A and SPSC's Value grade of F.
CORE sticks out from SPSC in both our Zacks Rank and Style Scores models, so value investors will likely feel that CORE is the better 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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