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 offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, StoneCo Ltd. is sporting a Zacks Rank of #1 (Strong Buy), while Informatica Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that STNE has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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 18.89, while INFA has a forward P/E of 25.26. We also note that STNE has a PEG ratio of 0.34. 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. INFA currently has a PEG ratio of 6.81.
Another notable valuation metric for STNE is its P/B ratio of 1.63. 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 2.61.
These metrics, and several others, help STNE earn a Value grade of B, while INFA has been given a Value grade of C.
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
