Investors interested in stocks from the Internet - Software sector have probably already heard of DoubleVerify Holdings (DV) and F5 Networks (FFIV). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
DoubleVerify Holdings and F5 Networks are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DV has an improving earnings outlook. But this is only part of the picture 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.
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.
DV currently has a forward P/E ratio of 12.36, while FFIV has a forward P/E of 22.09. We also note that DV has a PEG ratio of 0.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FFIV currently has a PEG ratio of 2.95.
Another notable valuation metric for DV is its P/B ratio of 1.88. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FFIV has a P/B of 5.6.
These metrics, and several others, help DV earn a Value grade of B, while FFIV has been given a Value grade of D.
DV stands above FFIV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DV is the superior value option right now.
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