EGHT or NEWR: Which Is the Better Value Stock Right Now?
Investors interested in Internet - Software stocks are likely familiar with 8x8 (EGHT) and New Relic (NEWR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, 8x8 is sporting a Zacks Rank of #2 (Buy), while New Relic has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EGHT likely has seen a stronger improvement to its earnings outlook than NEWR has recently. But this is just one factor that value investors are interested in.
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 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.
EGHT currently has a forward P/E ratio of 7.43, while NEWR has a forward P/E of 39.97. We also note that EGHT has a PEG ratio of 0.34. 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. NEWR currently has a PEG ratio of 1.49.
Another notable valuation metric for EGHT is its P/B ratio of 4.54. 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, NEWR has a P/B of 13.25.
Based on these metrics and many more, EGHT holds a Value grade of B, while NEWR has a Value grade of F.
EGHT 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 EGHT is likely the superior value option right now.
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8x8 Inc (EGHT) : Free Stock Analysis Report
New Relic, Inc. (NEWR) : Free Stock Analysis Report
