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FFIV vs. COUP: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Internet - Software sector might want to consider either F5 Networks (FFIV - Free Report) or Coupa Software, Inc. . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

F5 Networks and Coupa Software, Inc. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FFIV is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

FFIV currently has a forward P/E ratio of 13.62, while COUP has a forward P/E of 744.30. We also note that FFIV has a PEG ratio of 1.18. 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. COUP currently has a PEG ratio of 26.78.

Another notable valuation metric for FFIV is its P/B ratio of 3.61. 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, COUP has a P/B of 40.88.

These metrics, and several others, help FFIV earn a Value grade of B, while COUP has been given a Value grade of F.

FFIV has seen stronger estimate revision activity and sports more attractive valuation metrics than COUP, so it seems like value investors will conclude that FFIV is the superior option right now.


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