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JCOM vs. PYPL: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Internet - Software stocks have likely encountered both j2 Global and Paypal (PYPL - 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

j2 Global and Paypal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JCOM is likely seeing its earnings outlook improve to a greater extent. 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.

JCOM currently has a forward P/E ratio of 14.55, while PYPL has a forward P/E of 58.84. We also note that JCOM has a PEG ratio of 1.82. 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. PYPL currently has a PEG ratio of 2.73.

Another notable valuation metric for JCOM is its P/B ratio of 4.87. 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, PYPL has a P/B of 15.64.

Based on these metrics and many more, JCOM holds a Value grade of B, while PYPL has a Value grade of D.

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


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