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Investors looking for stocks in the Internet - Software sector might want to consider either Sogou (SOGO) or Mimecast (MIME). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Sogou is sporting a Zacks Rank of #2 (Buy), while Mimecast has a Zacks Rank of #3 (Hold). This means that SOGO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 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.
SOGO currently has a forward P/E ratio of 18.37, while MIME has a forward P/E of 71.51. We also note that SOGO has a PEG ratio of 0.91. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MIME currently has a PEG ratio of 3.58.
Another notable valuation metric for SOGO is its P/B ratio of 1.28. 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, MIME has a P/B of 9.32.
These are just a few of the metrics contributing to SOGO's Value grade of B and MIME's Value grade of D.
SOGO sticks out from MIME in both our Zacks Rank and Style Scores models, so value investors will likely feel that SOGO is the better option right now.
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