HPE vs. ZI: Which Stock Is the Better Value Option?
Investors interested in Computer - Integrated Systems stocks are likely familiar with Hewlett Packard Enterprise (HPE) and ZoomInfo (ZI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Hewlett Packard Enterprise has a Zacks Rank of #2 (Buy), while ZoomInfo has a Zacks Rank of #4 (Sell) right now. This means that HPE'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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HPE currently has a forward P/E ratio of 10.50, while ZI has a forward P/E of 11.78. We also note that HPE has a PEG ratio of 2.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ZI currently has a PEG ratio of 3.94.
Another notable valuation metric for HPE is its P/B ratio of 1.20. 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, ZI has a P/B of 2.03.
These are just a few of the metrics contributing to HPE's Value grade of A and ZI's Value grade of C.
HPE sticks out from ZI in both our Zacks Rank and Style Scores models, so value investors will likely feel that HPE is the better option right now.
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Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
ZoomInfo Technologies Inc. (ZI) : Free Stock Analysis Report