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FFIV or COUP: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Internet - Software sector might want to consider either F5 Networks (FFIV) or Coupa Software, Inc. (COUP). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, F5 Networks has a Zacks Rank of #2 (Buy), while Coupa Software, Inc. has a Zacks Rank of #3 (Hold). This means that FFIV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

FFIV currently has a forward P/E ratio of 14.87, while COUP has a forward P/E of 756.34. We also note that FFIV has a PEG ratio of 1.29. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. COUP currently has a PEG ratio of 27.22.

Another notable valuation metric for FFIV is its P/B ratio of 3.93. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, COUP has a P/B of 44.75.

These are just a few of the metrics contributing to FFIV's Value grade of B and COUP's Value grade of F.

FFIV has seen stronger estimate revision activity and sports more attractive valuation metrics than COUP, so it seems like value investors will conclude that FFIV is the superior option right now.

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F5 Networks, Inc. (FFIV) : Free Stock Analysis Report
Coupa Software, Inc. (COUP) : Free Stock Analysis Report
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Zacks Investment Research