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FFIV vs. COUP: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 mins read

Investors interested in Internet - Software stocks are likely familiar with F5 Networks (FFIV) and 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

F5 Networks and Coupa Software, Inc. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that FFIV likely has seen a stronger improvement to its earnings outlook than COUP has recently. But this is just one piece of the puzzle for value investors.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

FFIV currently has a forward P/E ratio of 14.41, while COUP has a forward P/E of 756.62. We also note that FFIV has a PEG ratio of 1.25. 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. COUP currently has a PEG ratio of 27.23.

Another notable valuation metric for FFIV is its P/B ratio of 3.80. 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, COUP has a P/B of 42.70.

These metrics, and several others, help FFIV earn a Value grade of B, while COUP has been given a Value grade of F.

FFIV sticks out from COUP in both our Zacks Rank and Style Scores models, so value investors will likely feel that FFIV is the better option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
F5 Networks, Inc. (FFIV) : Free Stock Analysis Report
Coupa Software, Inc. (COUP) : Free Stock Analysis Report
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Zacks Investment Research