Investors with an interest in Internet - Software stocks have likely encountered both j2 Global (JCOM - Free Report) and Workday (WDAY - 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
j2 Global and Workday are sporting Zacks Ranks of #1 (Strong 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 JCOM has an improving earnings outlook. But this is only part of the picture 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.
JCOM currently has a forward P/E ratio of 11.61, while WDAY has a forward P/E of 116.46. We also note that JCOM has a PEG ratio of 1.45. 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. WDAY currently has a PEG ratio of 4.36.
Another notable valuation metric for JCOM is its P/B ratio of 3.45. 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, WDAY has a P/B of 15.18.
Based on these metrics and many more, JCOM holds a Value grade of B, while WDAY has a Value grade of F.
JCOM has seen stronger estimate revision activity and sports more attractive valuation metrics than WDAY, so it seems like value investors will conclude that JCOM is the superior option right now.