Back to top

Image: Bigstock

HSTM vs. ZS: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in stocks from the Internet - Services sector have probably already heard of HealthStream (HSTM - Free Report) and Zscaler (ZS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, HealthStream has a Zacks Rank of #2 (Buy), while Zscaler has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HSTM is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

HSTM currently has a forward P/E ratio of 70.87, while ZS has a forward P/E of 377.84. We also note that HSTM has a PEG ratio of 7.09. 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. ZS currently has a PEG ratio of 9.66.

Another notable valuation metric for HSTM is its P/B ratio of 1.83. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ZS has a P/B of 54.08.

These are just a few of the metrics contributing to HSTM's Value grade of B and ZS's Value grade of F.

HSTM sticks out from ZS in both our Zacks Rank and Style Scores models, so value investors will likely feel that HSTM is the better option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


HealthStream, Inc. (HSTM) - free report >>

Zscaler, Inc. (ZS) - free report >>

Published in