Back to top

Image: Bigstock

ORCL or INTU: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Computer - Software sector might want to consider either Oracle (ORCL) or Intuit (INTU). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Oracle has a Zacks Rank of #2 (Buy), while Intuit has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ORCL has an improving earnings outlook. 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ORCL currently has a forward P/E ratio of 14.33, while INTU has a forward P/E of 39.43. We also note that ORCL has a PEG ratio of 1.47. 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. INTU currently has a PEG ratio of 2.51.

Another notable valuation metric for ORCL is its P/B ratio of 11.05. 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, INTU has a P/B of 21.40.

These are just a few of the metrics contributing to ORCL's Value grade of B and INTU's Value grade of F.

ORCL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ORCL is likely the superior value option right now.

Published in