Investors looking for stocks in the Internet - Software sector might want to consider either j2 Global (JCOM - Free Report) or Kingdee International Software Group Co., Ltd. Unsponsored ADR (KGDEY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, j2 Global has a Zacks Rank of #2 (Buy), while Kingdee International Software Group Co., Ltd. Unsponsored ADR has a Zacks Rank of #3 (Hold). This means that JCOM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
JCOM currently has a forward P/E ratio of 12.47, while KGDEY has a forward P/E of 62.25. We also note that JCOM has a PEG ratio of 1.56. 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. KGDEY currently has a PEG ratio of 2.39.
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, KGDEY has a P/B of 4.93.
Based on these metrics and many more, JCOM holds a Value grade of B, while KGDEY has a Value grade of F.
JCOM sticks out from KGDEY in both our Zacks Rank and Style Scores models, so value investors will likely feel that JCOM is the better option right now.