Investors interested in Internet – Services stocks are likely familiar with Uber Technologies (UBER – Free Report) and Zscaler (ZS – Free Report) . 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Uber Technologies and Zscaler have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
UBER currently has a forward P/E ratio of 32.14, while ZS has a forward P/E of 61.21. We also note that UBER has a PEG ratio of 0.76. 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. ZS currently has a PEG ratio of 5.98.
Another notable valuation metric for UBER is its P/B ratio of 8.21. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ZS has a P/B of 19.67.
These metrics, and several others, help UBER earn a Value grade of B, while ZS has been given a Value grade of D.
Both UBER and ZS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UBER is the superior value option right now.
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