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PYPL vs. BL: Which Stock Is the Better Value Option?

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Investors with an interest in Internet - Software stocks have likely encountered both Paypal (PYPL - Free Report) and BlackLine (BL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Paypal and BlackLine are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that PYPL'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 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 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.

PYPL currently has a forward P/E ratio of 12.90, while BL has a forward P/E of 28.17. We also note that PYPL has a PEG ratio of 0.96. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BL currently has a PEG ratio of 5.12.

Another notable valuation metric for PYPL is its P/B ratio of 3.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BL has a P/B of 13.61.

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

PYPL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PYPL is likely the superior value option right now.


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