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IIJI vs. SHOP: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
The Macerich Company (MAC) opens Scottsdale Fashion Square's refurbished luxury wing. The face-lift enables the mall to add an impressive tenant lineup to its roster.

Investors interested in stocks from the Internet - Services sector have probably already heard of Internet Initiative Japan (IIJI) and Shopify (SHOP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Internet Initiative Japan and Shopify are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that IIJI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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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.

IIJI currently has a forward P/E ratio of 22.74, while SHOP has a forward P/E of 972.32. We also note that IIJI 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. SHOP currently has a PEG ratio of 38.89.

Another notable valuation metric for IIJI is its P/B ratio of 1.34. 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, SHOP has a P/B of 10.91.

Based on these metrics and many more, IIJI holds a Value grade of A, while SHOP has a Value grade of F.

IIJI sticks out from SHOP in both our Zacks Rank and Style Scores models, so value investors will likely feel that IIJI is the better option right now.


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Internet Initiative Japan, Inc. (IIJI) : Free Stock Analysis Report
 
Shopify Inc. (SHOP) : Free Stock Analysis Report
 
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