Investors interested in stocks from the Internet - Software sector have probably already heard of Sogou (SOGO - Free Report) and Nice (NICE - 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Sogou and Nice are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that SOGO likely has seen a stronger improvement to its earnings outlook than NICE has recently. 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.
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.
SOGO currently has a forward P/E ratio of 18.67, while NICE has a forward P/E of 28.57. We also note that SOGO has a PEG ratio of 0.92. 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. NICE currently has a PEG ratio of 2.86.
Another notable valuation metric for SOGO is its P/B ratio of 1.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NICE has a P/B of 4.64.
These are just a few of the metrics contributing to SOGO's Value grade of B and NICE's Value grade of D.
SOGO sticks out from NICE in both our Zacks Rank and Style Scores models, so value investors will likely feel that SOGO is the better option right now.