Investors with an interest in Computers - IT Services stocks have likely encountered both SAIC (SAIC - Free Report) and Fair Isaac (FICO - 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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
SAIC and Fair Isaac are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that SAIC likely has seen a stronger improvement to its earnings outlook than FICO has recently. However, value investors will care about much more than just this.
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.
SAIC currently has a forward P/E ratio of 17.38, while FICO has a forward P/E of 36.01. We also note that SAIC has a PEG ratio of 3.48. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FICO currently has a PEG ratio of 3.60.
Another notable valuation metric for SAIC is its P/B ratio of 9.13. 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, FICO has a P/B of 22.66.
These are just a few of the metrics contributing to SAIC's Value grade of B and FICO's Value grade of D.
SAIC has seen stronger estimate revision activity and sports more attractive valuation metrics than FICO, so it seems like value investors will conclude that SAIC is the superior option right now.