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ORCL vs. SLP: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors with an interest in Computer - Software stocks have likely encountered both Oracle (ORCL) and Simulations Plus (SLP). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Oracle has a Zacks Rank of #2 (Buy), while Simulations Plus has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ORCL likely has seen a stronger improvement to its earnings outlook than SLP 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 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.

ORCL currently has a forward P/E ratio of 14.21, while SLP has a forward P/E of 113.93. We also note that ORCL has a PEG ratio of 1.58. 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. SLP currently has a PEG ratio of 7.60.

Another notable valuation metric for ORCL is its P/B ratio of 17.74. 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, SLP has a P/B of 26.51.

These metrics, and several others, help ORCL earn a Value grade of B, while SLP has been given a Value grade of D.

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


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Oracle Corporation (ORCL) : Free Stock Analysis Report
 
Simulations Plus, Inc. (SLP) : Free Stock Analysis Report
 
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Zacks Investment Research