Investors with an interest in Internet - Software stocks have likely encountered both Meet Group (MEET - Free Report) and Workday (WDAY - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Meet Group has a Zacks Rank of #2 (Buy), while Workday has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MEET likely has seen a stronger improvement to its earnings outlook than WDAY has recently. But this is just one piece of the puzzle for value investors.
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.
MEET currently has a forward P/E ratio of 11.79, while WDAY has a forward P/E of 131.30. We also note that MEET has a PEG ratio of 0.59. 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. WDAY currently has a PEG ratio of 4.21.
Another notable valuation metric for MEET is its P/B ratio of 1.55. 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 19.53.
These metrics, and several others, help MEET earn a Value grade of B, while WDAY has been given a Value grade of F.
MEET has seen stronger estimate revision activity and sports more attractive valuation metrics than WDAY, so it seems like value investors will conclude that MEET is the superior option right now.