Investors with an interest in Computer - Software stocks have likely encountered both PTC Inc. (PTC) and Adobe Systems (ADBE). But which of these two stocks presents investors with the better value opportunity right now? 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.
Right now, PTC Inc. is sporting a Zacks Rank of #2 (Buy), while Adobe Systems has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PTC likely has seen a stronger improvement to its earnings outlook than ADBE has recently. However, value investors will care about much more than just this.
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 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.
PTC currently has a forward P/E ratio of 32.46, while ADBE has a forward P/E of 38.82. We also note that PTC has a PEG ratio of 1. 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. ADBE currently has a PEG ratio of 2.43.
Another notable valuation metric for PTC is its P/B ratio of 6.79. 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, ADBE has a P/B of 17.49.
These metrics, and several others, help PTC earn a Value grade of B, while ADBE has been given a Value grade of D.
PTC 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 PTC is likely the superior value option right now.
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PTC Inc. (PTC) : Free Stock Analysis Report
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