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HPE vs. NCR: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Computer - Integrated Systems sector have probably already heard of Hewlett Packard Enterprise (HPE) and NCR (NCR). 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 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.

Right now, Hewlett Packard Enterprise is sporting a Zacks Rank of #2 (Buy), while NCR has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HPE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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 8.31, while NCR has a forward P/E of 11.33. We also note that HPE has a PEG ratio of 1.29. 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. NCR currently has a PEG ratio of 2.83.

Another notable valuation metric for HPE is its P/B ratio of 1.03. 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, NCR has a P/B of 8.34.

Based on these metrics and many more, HPE holds a Value grade of A, while NCR has a Value grade of C.

HPE 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 HPE is likely the superior value option right now.


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Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
NCR Corporation (NCR) : Free Stock Analysis Report
 
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