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MIXT vs. ARCE: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Internet - Software sector have probably already heard of MiX Telematics Limited (MIXT) and Arco Platform Limited (ARCE). 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 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.

MiX Telematics Limited and Arco Platform Limited 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 MIXT has an improving earnings outlook. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

MIXT currently has a forward P/E ratio of 12.80, while ARCE has a forward P/E of 35.53. We also note that MIXT has a PEG ratio of 0.51. 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. ARCE currently has a PEG ratio of 0.72.

Another notable valuation metric for MIXT is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ARCE has a P/B of 2.60.

These metrics, and several others, help MIXT earn a Value grade of B, while ARCE has been given a Value grade of F.

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


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Arco Platform Limited (ARCE) : Free Stock Analysis Report
 
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Zacks Investment Research