Investors with an interest in Internet - Services stocks have likely encountered both HealthStream (HSTM) and Zscaler (ZS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, HealthStream has a Zacks Rank of #2 (Buy), while Zscaler has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HSTM likely has seen a stronger improvement to its earnings outlook than ZS has recently. But this is only part of the picture for value investors.

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.

HSTM currently has a forward P/E ratio of 52.82, while ZS has a forward P/E of 71.56. We also note that HSTM has a PEG ratio of 4.40. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZS currently has a PEG ratio of 7.

Another notable valuation metric for HSTM is its P/B ratio of 2.83. 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, ZS has a P/B of 24.70.

Based on these metrics and many more, HSTM holds a Value grade of B, while ZS has a Value grade of F.

HSTM 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 HSTM is likely the superior value option right now.

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