Investors with an interest in Internet - Software stocks have likely encountered both StoneCo Ltd. (STNE) and BlackLine (BL). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both StoneCo Ltd. and BlackLine are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
STNE currently has a forward P/E ratio of 17.65, while BL has a forward P/E of 67.52. We also note that STNE has a PEG ratio of 0.52. 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. BL currently has a PEG ratio of 1.82.
Another notable valuation metric for STNE is its P/B ratio of 1.27. 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, BL has a P/B of 32.94.
Based on these metrics and many more, STNE holds a Value grade of A, while BL has a Value grade of D.
Both STNE and BL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STNE is the superior value option right now.
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