Investors looking for stocks in the Internet - Software sector might want to consider either j2 Global (JCOM) or Mimecast (MIME). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, j2 Global has a Zacks Rank of #1 (Strong Buy), while Mimecast has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JCOM likely has seen a stronger improvement to its earnings outlook than MIME has recently. But this is just one piece of the puzzle for value investors.
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.
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.
JCOM currently has a forward P/E ratio of 12.15, while MIME has a forward P/E of 107.94. We also note that JCOM has a PEG ratio of 1.52. 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. MIME currently has a PEG ratio of 5.40.
Another notable valuation metric for JCOM is its P/B ratio of 3.95. 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, MIME has a P/B of 15.66.
These metrics, and several others, help JCOM earn a Value grade of B, while MIME has been given a Value grade of F.
JCOM sticks out from MIME in both our Zacks Rank and Style Scores models, so value investors will likely feel that JCOM 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
j2 Global, Inc. (JCOM) : Free Stock Analysis Report
Mimecast Limited (MIME) : Free Stock Analysis Report
To read this article on Zacks.com click here.