Investors interested in stocks from the Computer – Software sector have probably already heard of Symantec (SYMC) and Pegasystems (PEGA). But which of these two companies is the best option for those looking for undervalued stocks? Let’s 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.
Symantec has a Zacks Rank of #2 (Buy), while Pegasystems has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SYMC has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
SYMC currently has a forward P/E ratio of 13.28, while PEGA has a forward P/E of 161. We also note that SYMC has a PEG ratio of 1.68. 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. PEGA currently has a PEG ratio of 20.13.
Another notable valuation metric for SYMC is its P/B ratio of 2.19. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, PEGA has a P/B of 6.93.
These are just a few of the metrics contributing to SYMC’s Value grade of B and PEGA’s Value grade of F.
SYMC sticks out from PEGA in both our Zacks Rank and Style Scores models, so value investors will likely feel that SYMC is the better option right now.
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