STNE or INFA: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Internet - Software sector might want to consider either StoneCo Ltd. (STNE) or Informatica Inc. (INFA). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
StoneCo Ltd. and Informatica Inc. are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that STNE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
STNE currently has a forward P/E ratio of 16.66, while INFA has a forward P/E of 24.18. We also note that STNE has a PEG ratio of 0.30. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. INFA currently has a PEG ratio of 4.27.
Another notable valuation metric for STNE is its P/B ratio of 1.42. 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, INFA has a P/B of 3.07.
Based on these metrics and many more, STNE holds a Value grade of A, while INFA has a Value grade of F.
STNE sticks out from INFA in both our Zacks Rank and Style Scores models, so value investors will likely feel that STNE is the better option right now.
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StoneCo Ltd. (STNE) : Free Stock Analysis Report
Informatica Inc. (INFA) : Free Stock Analysis Report
