Investors interested in stocks from the Internet - Software sector have probably already heard of ZoomInfo (ZI) and Adyen N.V. Unsponsored ADR (ADYEY). 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.
Currently, both ZoomInfo and Adyen N.V. Unsponsored ADR are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
ZI currently has a forward P/E ratio of 8.11, while ADYEY has a forward P/E of 39.96. We also note that ZI has a PEG ratio of 1.08. 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. ADYEY currently has a PEG ratio of 1.91.
Another notable valuation metric for ZI is its P/B ratio of 1.60. 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, ADYEY has a P/B of 12.46.
Based on these metrics and many more, ZI holds a Value grade of B, while ADYEY has a Value grade of F.
Both ZI and ADYEY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ZI is the superior value option right now.
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ZoomInfo Technologies Inc. (ZI) : Free Stock Analysis Report
Adyen N.V. Unsponsored ADR (ADYEY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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