Investors interested in stocks from the Security sector have probably already heard of Zix (ZIXI - Free Report) and Proofpoint (PFPT - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Zix and Proofpoint have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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 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.
ZIXI currently has a forward P/E ratio of 14.80, while PFPT has a forward P/E of 70.28. We also note that ZIXI has a PEG ratio of 0.99. 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. PFPT currently has a PEG ratio of 2.57.
Another notable valuation metric for ZIXI is its P/B ratio of 8.11. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PFPT has a P/B of 12.42.
These metrics, and several others, help ZIXI earn a Value grade of B, while PFPT has been given a Value grade of F.
Both ZIXI and PFPT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ZIXI is the superior value option right now.