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HPE or ITI: Which Is the Better Value Stock Right Now?

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·2 min read
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Investors interested in Computer - Integrated Systems stocks are likely familiar with Hewlett Packard Enterprise (HPE) and Iteris (ITI). But which of these two companies is the best option for those looking for undervalued stocks? 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.

Hewlett Packard Enterprise and Iteris are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HPE has an improving earnings outlook. However, value investors will care about much more than just this.

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.

HPE currently has a forward P/E ratio of 8.76, while ITI has a forward P/E of 28.73. We also note that HPE has a PEG ratio of 0.97. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ITI currently has a PEG ratio of 1.92.

Another notable valuation metric for HPE is its P/B ratio of 1.28. 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, ITI has a P/B of 3.38.

These metrics, and several others, help HPE earn a Value grade of A, while ITI has been given a Value grade of D.

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


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Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
Iteris, Inc. (ITI) : Free Stock Analysis Report
 
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