Investors interested in Internet - Software stocks are likely familiar with 8x8 (EGHT) and Autodesk (ADSK). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, 8x8 has a Zacks Rank of #2 (Buy), while Autodesk has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EGHT likely has seen a stronger improvement to its earnings outlook than ADSK has recently. But this is just one piece of the puzzle 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 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.
EGHT currently has a forward P/E ratio of 6.11, while ADSK has a forward P/E of 16.08. We also note that EGHT has a PEG ratio of 0.86. 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. ADSK currently has a PEG ratio of 1.03.
Another notable valuation metric for EGHT is its P/B ratio of 2.08. 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, ADSK has a P/B of 12.55.
These metrics, and several others, help EGHT earn a Value grade of A, while ADSK has been given a Value grade of C.
EGHT 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 EGHT is likely the superior value option right now.
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8x8 Inc (EGHT) : Free Stock Analysis Report
Autodesk, Inc. (ADSK) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
