Back to top
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
International Business Machines Corporation (IBM) - free report >>
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
International Business Machines Corporation (IBM) - free report >>
Image: Bigstock
HPE or IBM: Which Is the Better Value Stock Right Now?
Investors with an interest in Computer - Integrated Systems stocks have likely encountered both Hewlett Packard Enterprise (HPE - Free Report) and IBM (IBM - 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.
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.
Both Hewlett Packard Enterprise and IBM have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
HPE currently has a forward P/E ratio of 7.88, while IBM has a forward P/E of 15.07. We also note that HPE has a PEG ratio of 1.98. 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. IBM currently has a PEG ratio of 3.61.
Another notable valuation metric for HPE is its P/B ratio of 1.05. 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, IBM has a P/B of 5.82.
Based on these metrics and many more, HPE holds a Value grade of A, while IBM has a Value grade of C.
Both HPE and IBM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HPE is the superior value option right now.