Investors interested in stocks from the Business - Services sector have probably already heard of Core-Mark (CORE - Free Report) and SPS Commerce (SPSC - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Core-Mark and SPS Commerce are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
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.
CORE currently has a forward P/E ratio of 23.88, while SPSC has a forward P/E of 47.94. We also note that CORE has a PEG ratio of 2.98. 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. SPSC currently has a PEG ratio of 3.20.
Another notable valuation metric for CORE is its P/B ratio of 3.08. 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, SPSC has a P/B of 5.72.
These metrics, and several others, help CORE earn a Value grade of A, while SPSC has been given a Value grade of F.
Both CORE and SPSC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CORE is the superior value option right now.