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SNX vs. QTWO: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Business - Software Services sector might want to consider either Synnex (SNX) or Q2 Holdings (QTWO). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Synnex has a Zacks Rank of #2 (Buy), while Q2 Holdings has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SNX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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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.

SNX currently has a forward P/E ratio of 11.83, while QTWO has a forward P/E of 1,055.39. We also note that SNX has a PEG ratio of 1.26. 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. QTWO currently has a PEG ratio of 28.84.

Another notable valuation metric for SNX is its P/B ratio of 1.71. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, QTWO has a P/B of 7.26.

These metrics, and several others, help SNX earn a Value grade of A, while QTWO has been given a Value grade of F.

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


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SYNNEX Corporation (SNX) : Free Stock Analysis Report
 
Q2 Holdings, Inc. (QTWO) : Free Stock Analysis Report
 
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Zacks Investment Research