Investors with an interest in Internet - Software stocks have likely encountered both Meet Group (MEET - Free Report) and Mimecast (MIME - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Meet Group and Mimecast are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MEET currently has a forward P/E ratio of 7.79, while MIME has a forward P/E of 100.50. We also note that MEET has a PEG ratio of 0.39. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MIME currently has a PEG ratio of 5.03.
Another notable valuation metric for MEET is its P/B ratio of 1.35. 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 15.83.
These metrics, and several others, help MEET earn a Value grade of A, while MIME has been given a Value grade of F.
MEET has seen stronger estimate revision activity and sports more attractive valuation metrics than MIME, so it seems like value investors will conclude that MEET is the superior option right now.