Investors looking for stocks in the Internet - Software sector might want to consider either MiX Telematics Limited (MIXT) or Mimecast (MIME). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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 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 MIXT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
MIXT currently has a forward P/E ratio of 16.81, while MIME has a forward P/E of 88.64. We also note that MIXT has a PEG ratio of 0.67. 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. MIME currently has a PEG ratio of 4.43.
Another notable valuation metric for MIXT is its P/B ratio of 2.57. 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, MIME has a P/B of 13.43.
These are just a few of the metrics contributing to MIXT's Value grade of B and MIME's Value grade of F.
MIXT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that MIXT is likely the superior value 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
MiX Telematics Limited (MIXT) : Free Stock Analysis Report
Mimecast Limited (MIME) : Free Stock Analysis Report
To read this article on Zacks.com click here.