Investors interested in stocks from the Business - Services sector have probably already heard of Core-Mark (CORE) and SPS Commerce (SPSC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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 and SPS Commerce are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that CORE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 24.04, while SPSC has a forward P/E of 51.53. We also note that CORE has a PEG ratio of 3.01. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SPSC currently has a PEG ratio of 3.44.
Another notable valuation metric for CORE is its P/B ratio of 3.10. 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 6.15.
These metrics, and several others, help CORE earn a Value grade of A, while SPSC has been given a Value grade of D.
CORE has seen stronger estimate revision activity and sports more attractive valuation metrics than SPSC, so it seems like value investors will conclude that CORE is the superior 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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