Yahoo Finance ZM vs. MDB: Which Stock Is the Better Value Option?
Investors interested in stocks from the Internet - Software sector have probably already heard of Zoom Video Communications (ZM) and MongoDB (MDB). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Right now, Zoom Video Communications is sporting a Zacks Rank of #2 (Buy), while MongoDB has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ZM is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
ZM currently has a forward P/E ratio of 11.28, while MDB has a forward P/E of 110.90. We also note that ZM has a PEG ratio of 4.21. 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. MDB currently has a PEG ratio of 13.11.
Another notable valuation metric for ZM is its P/B ratio of 2.12. 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, MDB has a P/B of 14.48.
These metrics, and several others, help ZM earn a Value grade of B, while MDB has been given a Value grade of F.
ZM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ZM is likely the superior value option right now.
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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
MongoDB, Inc. (MDB) : Free Stock Analysis Report
