Investors interested in stocks from the Internet - Software sector have probably already heard of 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with 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 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 6.68, while MIME has a forward P/E of 80.29. We also note that MEET has a PEG ratio of 0.28. 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. MIME currently has a PEG ratio of 4.01.
Another notable valuation metric for MEET is its P/B ratio of 1.18. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MIME has a P/B of 11.76.
These are just a few of the metrics contributing to MEET's Value grade of A and MIME's Value grade of F.
MEET stands above MIME thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MEET is the superior value option right now.