Investors interested in stocks from the Consumer Services - Miscellaneous sector have probably already heard of SP Plus (SP - Free Report) and Care.com . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both SP Plus and Care.com have 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SP currently has a forward P/E ratio of 15.69, while CRCM has a forward P/E of 25.36. We also note that SP has a PEG ratio of 1.57. 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. CRCM currently has a PEG ratio of 1.69.
Another notable valuation metric for SP is its P/B ratio of 2.65. 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, CRCM has a P/B of 3.78.
These are just a few of the metrics contributing to SP's Value grade of B and CRCM's Value grade of D.
Both SP and CRCM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SP is the superior value option right now.