SNX vs. GWRE: Which Stock Is the Better Value Option?
Investors with an interest in Business - Software Services stocks have likely encountered both Synnex (SNX) and Guidewire Software (GWRE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Synnex has a Zacks Rank of #1 (Strong Buy), while Guidewire Software has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SNX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 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 10.78, while GWRE has a forward P/E of 118.35. We also note that SNX has a PEG ratio of 1.15. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GWRE currently has a PEG ratio of 8.45.
Another notable valuation metric for SNX is its P/B ratio of 1.30. 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, GWRE has a P/B of 5.34.
These metrics, and several others, help SNX earn a Value grade of B, while GWRE has been given a Value grade of D.
SNX stands above GWRE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNX is the superior value option right now.
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SYNNEX Corporation (SNX) : Free Stock Analysis Report
Guidewire Software, Inc. (GWRE) : Free Stock Analysis Report
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