Investors with an interest in Technology Services stocks have likely encountered both Rocket Companies (RKT) and 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.
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.
Currently, Rocket Companies has a Zacks Rank of #1 (Strong Buy), while Thomson Reuters has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that RKT likely has seen a stronger improvement to its earnings outlook than TRI has recently. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
RKT currently has a forward P/E ratio of 6.10, while TRI has a forward P/E of 60.11. We also note that RKT has a PEG ratio of 0.61. 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. TRI currently has a PEG ratio of 7.51.
Another notable valuation metric for RKT is its P/B ratio of 3.03. 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, TRI has a P/B of 4.16.
These metrics, and several others, help RKT earn a Value grade of B, while TRI has been given a Value grade of D.
RKT stands above TRI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RKT is 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
Rocket Companies, Inc. (RKT) : Free Stock Analysis Report
Thomson Reuters Corp (TRI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research