Investors interested in Internet - Software stocks are likely familiar with j2 Global (JCOM) and COUPA SOFTWARE (COUP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, j2 Global has a Zacks Rank of #2 (Buy), while COUPA SOFTWARE has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JCOM likely has seen a stronger improvement to its earnings outlook than COUP has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
JCOM currently has a forward P/E ratio of 12.63, while COUP has a forward P/E of 350.47. We also note that JCOM has a PEG ratio of 1.58. 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. COUP currently has a PEG ratio of 8.08.
Another notable valuation metric for JCOM is its P/B ratio of 3.56. 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, COUP has a P/B of 22.96.
Based on these metrics and many more, JCOM holds a Value grade of B, while COUP has a Value grade of F.
JCOM sticks out from COUP in both our Zacks Rank and Style Scores models, so value investors will likely feel that JCOM is the better option right now.