Investors interested in Internet - Content stocks are likely familiar with DHI Group (DHX - Free Report) and Yandex (YNDX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, DHI Group has a Zacks Rank of #2 (Buy), while Yandex has a Zacks Rank of #4 (Sell). This means that DHX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
DHX currently has a forward P/E ratio of 21.20, while YNDX has a forward P/E of 73.23. We also note that DHX has a PEG ratio of 1.06. 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. YNDX currently has a PEG ratio of 2.26.
Another notable valuation metric for DHX is its P/B ratio of 0.94. 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, YNDX has a P/B of 4.91.
These metrics, and several others, help DHX earn a Value grade of A, while YNDX has been given a Value grade of D.
DHX sticks out from YNDX in both our Zacks Rank and Style Scores models, so value investors will likely feel that DHX is the better option right now.