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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Meet Group has a Zacks Rank of #1 (Strong Buy), while Mimecast has a Zacks Rank of #3 (Hold). 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. 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.
MEET currently has a forward P/E ratio of 8.48, while MIME has a forward P/E of 102.62. We also note that MEET has a PEG ratio of 0.35. 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 5.13.
Another notable valuation metric for MEET is its P/B ratio of 1.97. 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 14.87.
These are just a few of the metrics contributing to MEET's Value grade of B and MIME's Value grade of F.
MEET sticks out from MIME in both our Zacks Rank and Style Scores models, so value investors will likely feel that MEET is the better option right now.