Investors looking for stocks in the Business - Software Services sector might want to consider either Synnex (SNX) or Q2 Holdings (QTWO). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Synnex has a Zacks Rank of #2 (Buy), while Q2 Holdings has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SNX likely has seen a stronger improvement to its earnings outlook than QTWO 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.
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.
SNX currently has a forward P/E ratio of 8.21, while QTWO has a forward P/E of 447.48. We also note that SNX has a PEG ratio of 0.68. 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. QTWO currently has a PEG ratio of 22.37.
Another notable valuation metric for SNX is its P/B ratio of 1.44. 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, QTWO has a P/B of 21.59.
These are just a few of the metrics contributing to SNX's Value grade of A and QTWO's Value grade of F.
SNX 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 SNX is likely 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
SYNNEX Corporation (SNX) : Free Stock Analysis Report
Q2 Holdings, Inc. (QTWO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research