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MEET vs. MIME: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Internet - Software sector have probably already heard of Meet Group (MEET) and Mimecast (MIME). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.

Meet Group and Mimecast are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MEET is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

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.

MEET currently has a forward P/E ratio of 7.57, while MIME has a forward P/E of 115.85. We also note that MEET has a PEG ratio of 0.38. 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. MIME currently has a PEG ratio of 5.79.

Another notable valuation metric for MEET is its P/B ratio of 1.31. 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 16.81.

These metrics, and several others, help MEET earn a Value grade of A, while MIME has been given a Value grade of F.

MEET stands above MIME thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MEET is the superior value option right now.


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