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ZM vs. DOCN: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Internet - Software sector have probably already heard of Zoom Communications (ZM - Free Report) and DigitalOcean Holdings, Inc. (DOCN - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Zoom Communications and DigitalOcean Holdings, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ZM has an improving earnings 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ZM currently has a forward P/E ratio of 14.61, while DOCN has a forward P/E of 47.92. We also note that ZM has a PEG ratio of 2.77. 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. DOCN currently has a PEG ratio of 38.65.
Another notable valuation metric for ZM is its P/B ratio of 2.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, DOCN has a P/B of 6.04.
These metrics, and several others, help ZM earn a Value grade of B, while DOCN has been given a Value grade of D.
ZM sticks out from DOCN in both our Zacks Rank and Style Scores models, so value investors will likely feel that ZM is the better option right now.
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ZM vs. DOCN: Which Stock Is the Better Value Option?
Investors interested in stocks from the Internet - Software sector have probably already heard of Zoom Communications (ZM - Free Report) and DigitalOcean Holdings, Inc. (DOCN - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Zoom Communications and DigitalOcean Holdings, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ZM has an improving earnings 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ZM currently has a forward P/E ratio of 14.61, while DOCN has a forward P/E of 47.92. We also note that ZM has a PEG ratio of 2.77. 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. DOCN currently has a PEG ratio of 38.65.
Another notable valuation metric for ZM is its P/B ratio of 2.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, DOCN has a P/B of 6.04.
These metrics, and several others, help ZM earn a Value grade of B, while DOCN has been given a Value grade of D.
ZM sticks out from DOCN in both our Zacks Rank and Style Scores models, so value investors will likely feel that ZM is the better option right now.