Investors with an interest in Computer - Software stocks have likely encountered both Konami Corp. (KNMCY - Free Report) and Pegasystems (PEGA - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Konami Corp. has a Zacks Rank of #2 (Buy), while Pegasystems has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that KNMCY likely has seen a stronger improvement to its earnings outlook than PEGA has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
KNMCY currently has a forward P/E ratio of 15.94, while PEGA has a forward P/E of 381.89. We also note that KNMCY has a PEG ratio of 0.64. 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. PEGA currently has a PEG ratio of 47.74.
Another notable valuation metric for KNMCY is its P/B ratio of 2.40. 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, PEGA has a P/B of 7.83.
Based on these metrics and many more, KNMCY holds a Value grade of B, while PEGA has a Value grade of F.
KNMCY stands above PEGA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KNMCY is the superior value option right now.