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SABR vs. RNG: Which Stock Is the Better Value Option?

Zacks Equity Research
Crown (CCK) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors with an interest in Internet - Software and Services stocks have likely encountered both Sabre (SABR) and RingCentral (RNG). 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 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, Sabre is sporting a Zacks Rank of #2 (Buy), while RingCentral has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SABR is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SABR currently has a forward P/E ratio of 16.55, while RNG has a forward P/E of 111.88. We also note that SABR has a PEG ratio of 2.31. 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. RNG currently has a PEG ratio of 3.88.

Another notable valuation metric for SABR is its P/B ratio of 7.29. 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, RNG has a P/B of 20.51.

Based on these metrics and many more, SABR holds a Value grade of B, while RNG has a Value grade of F.

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


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