Back to top

Image: Bigstock

SNX vs. GWRE: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Business - Software Services sector might want to consider either Synnex (SNX - Free Report) or Guidewire Software (GWRE - 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.

Both Synnex and Guidewire Software have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SNX currently has a forward P/E ratio of 15.21, while GWRE has a forward P/E of 128.65. We also note that SNX has a PEG ratio of 1.62. 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. GWRE currently has a PEG ratio of 9.18.

Another notable valuation metric for SNX is its P/B ratio of 1.55. 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, GWRE has a P/B of 5.80.

These are just a few of the metrics contributing to SNX's Value grade of A and GWRE's Value grade of F.

Both SNX and GWRE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SNX is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


SYNNEX Corporation (SNX) - free report >>

Guidewire Software, Inc. (GWRE) - free report >>

Published in