Investors with an interest in Computer- Storage Devices stocks have likely encountered both Seagate (STX - Free Report) and NetApp (NTAP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Currently, both Seagate and NetApp are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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 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.
STX currently has a forward P/E ratio of 9.79, while NTAP has a forward P/E of 19.14. We also note that STX has a PEG ratio of 0.52. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NTAP currently has a PEG ratio of 1.38.
Another notable valuation metric for STX is its P/B ratio of 9.31. 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, NTAP has a P/B of 10.02.
These metrics, and several others, help STX earn a Value grade of A, while NTAP has been given a Value grade of C.
Both STX and NTAP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STX is the superior value option right now.