Investors looking for stocks in the Internet - Software sector might want to consider either Meet Group (MEET - Free Report) or Mimecast (MIME - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Meet Group is sporting a Zacks Rank of #2 (Buy), while Mimecast has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MEET is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 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.
MEET currently has a forward P/E ratio of 11.48, while MIME has a forward P/E of 170.15. We also note that MEET has a PEG ratio of 0.57. 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. MIME currently has a PEG ratio of 8.51.
Another notable valuation metric for MEET is its P/B ratio of 2.07. 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, MIME has a P/B of 18.05.
These are just a few of the metrics contributing to MEET's Value grade of B and MIME's Value grade of F.
MEET is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that MEET is likely the superior value option right now.