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SIFY vs. SHOP: Which Stock Is the Better Value Option?
Investors with an interest in Internet - Services stocks have likely encountered both Sify Technologies Limited (SIFY - Free Report) and Shopify (SHOP - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Right now, Sify Technologies Limited is sporting a Zacks Rank of #2 (Buy), while Shopify has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SIFY likely has seen a stronger improvement to its earnings outlook than SHOP has recently. 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 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.
SIFY currently has a forward P/E ratio of 22.80, while SHOP has a forward P/E of 536.38. We also note that SIFY has a PEG ratio of 1.14. 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. SHOP currently has a PEG ratio of 18.95.
Another notable valuation metric for SIFY is its P/B ratio of 2.18. 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, SHOP has a P/B of 5.84.
Based on these metrics and many more, SIFY holds a Value grade of A, while SHOP has a Value grade of D.
SIFY has seen stronger estimate revision activity and sports more attractive valuation metrics than SHOP, so it seems like value investors will conclude that SIFY is the superior option right now.