Investors interested in stocks from the Computer - Services sector have probably already heard of Perficient (PRFT - Free Report) and Forrester Research (FORR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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, Perficient is sporting a Zacks Rank of #2 (Buy), while Forrester Research has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PRFT has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
PRFT currently has a forward P/E ratio of 16.51, while FORR has a forward P/E of 30.54. We also note that PRFT has a PEG ratio of 1.61. 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. FORR currently has a PEG ratio of 2.54.
Another notable valuation metric for PRFT is its P/B ratio of 2.64. 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, FORR has a P/B of 5.90.
These metrics, and several others, help PRFT earn a Value grade of B, while FORR has been given a Value grade of F.
PRFT stands above FORR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PRFT is the superior value option right now.