SIFY vs. SHOP: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Internet - Services sector might want to consider either Sify Technologies Limited (SIFY) or Shopify (SHOP). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Sify Technologies Limited has a Zacks Rank of #2 (Buy), while Shopify has a Zacks Rank of #4 (Sell). This means that SIFY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
SIFY currently has a forward P/E ratio of 20.80, while SHOP has a forward P/E of 469.63. We also note that SIFY has a PEG ratio of 1.04. 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. SHOP currently has a PEG ratio of 20.41.
Another notable valuation metric for SIFY is its P/B ratio of 1.99. 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, SHOP has a P/B of 4.72.
Based on these metrics and many more, SIFY holds a Value grade of A, while SHOP has a Value grade of D.
SIFY stands above SHOP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SIFY is the superior value option right now.
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