Investors interested in Internet - Software stocks are likely familiar with MiX Telematics Limited (MIXT) and NIC (EGOV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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, MiX Telematics Limited is sporting a Zacks Rank of #2 (Buy), while NIC has a Zacks Rank of #3 (Hold). This means that MIXT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MIXT currently has a forward P/E ratio of 20.38, while EGOV has a forward P/E of 22.83. We also note that MIXT has a PEG ratio of 0.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EGOV currently has a PEG ratio of 2.28.
Another notable valuation metric for MIXT is its P/B ratio of 3.17. 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, EGOV has a P/B of 5.06.
These are just a few of the metrics contributing to MIXT's Value grade of A and EGOV's Value grade of C.
MIXT has seen stronger estimate revision activity and sports more attractive valuation metrics than EGOV, so it seems like value investors will conclude that MIXT is the superior option right now.
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