Investors looking for stocks in the Technology Services sector might want to consider either Parsons (PSN) or Thomson Reuters (TRI). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Parsons is sporting a Zacks Rank of #2 (Buy), while Thomson Reuters has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PSN likely has seen a stronger improvement to its earnings outlook than TRI has recently. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PSN currently has a forward P/E ratio of 22.74, while TRI has a forward P/E of 43.22. We also note that PSN has a PEG ratio of 1.90. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TRI currently has a PEG ratio of 3.18.
Another notable valuation metric for PSN is its P/B ratio of 2.19. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TRI has a P/B of 3.53.
Based on these metrics and many more, PSN holds a Value grade of B, while TRI has a Value grade of D.
PSN sticks out from TRI in both our Zacks Rank and Style Scores models, so value investors will likely feel that PSN is the better option right now.
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