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SABR or RNG: Which Is the Better Value Stock Right Now?

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Investors interested in Internet - Software and Services stocks are likely familiar with Sabre (SABR - Free Report) and RingCentral (RNG - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Sabre is sporting a Zacks Rank of #2 (Buy), while RingCentral has a Zacks Rank of #3 (Hold). This means that SABR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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.

SABR currently has a forward P/E ratio of 16.63, while RNG has a forward P/E of 106.57. We also note that SABR has a PEG ratio of 2.32. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RNG currently has a PEG ratio of 3.04.

Another notable valuation metric for SABR is its P/B ratio of 7.39. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RNG has a P/B of 20.20.

Based on these metrics and many more, SABR holds a Value grade of B, while RNG has a Value grade of F.

SABR sticks out from RNG in both our Zacks Rank and Style Scores models, so value investors will likely feel that SABR is the better option right now.


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