Investors interested in stocks from the Internet - Software sector have probably already heard of NIC (EGOV - Free Report) and Apptio . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
Right now, NIC is sporting a Zacks Rank of #2 (Buy), while Apptio has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EGOV likely has seen a stronger improvement to its earnings outlook than APTI has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
EGOV currently has a forward P/E ratio of 17.29, while APTI has a forward P/E of 529.23. We also note that EGOV has a PEG ratio of 1.73. 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. APTI currently has a PEG ratio of 42.34.
Another notable valuation metric for EGOV is its P/B ratio of 4.70. 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, APTI has a P/B of 8.12.
Based on these metrics and many more, EGOV holds a Value grade of B, while APTI has a Value grade of F.
EGOV sticks out from APTI in both our Zacks Rank and Style Scores models, so value investors will likely feel that EGOV is the better option right now.