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EGOV or WDAY: Which Is the Better Value Stock Right Now?

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Investors interested in Internet - Software stocks are likely familiar with NIC and Workday (WDAY - 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.

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.

NIC and Workday are both sporting a Zacks Rank of # 2 (Buy) right now. 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 only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

EGOV currently has a forward P/E ratio of 31.16, while WDAY has a forward P/E of 77.92. We also note that EGOV has a PEG ratio of 1.73. 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. WDAY currently has a PEG ratio of 2.98.

Another notable valuation metric for EGOV is its P/B ratio of 6.37. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WDAY has a P/B of 15.45.

These metrics, and several others, help EGOV earn a Value grade of B, while WDAY has been given a Value grade of D.

Both EGOV and WDAY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EGOV is the superior value option right now.


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