U.S. Markets closed

HPE vs. NCR: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Sanmina (SANM) closed at $30.68 in the latest trading session, marking a +0.69% move from the prior day.

Investors looking for stocks in the Computer - Integrated Systems sector might want to consider either Hewlett Packard Enterprise (HPE) or NCR (NCR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Hewlett Packard Enterprise and NCR are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), 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. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

HPE currently has a forward P/E ratio of 8.87, while NCR has a forward P/E of 11.05. We also note that HPE has a PEG ratio of 1.37. 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 2.76.

Another notable valuation metric for HPE is its P/B ratio of 1.10. 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, NCR has a P/B of 8.13.

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

HPE has seen stronger estimate revision activity and sports more attractive valuation metrics than NCR, so it seems like value investors will conclude that HPE is the superior 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
 
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
NCR Corporation (NCR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research