ZM or BL: Which Is the Better Value Stock Right Now?
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Investors interested in Internet - Software stocks are likely familiar with Zoom Video Communications (ZM) and BlackLine (BL). 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.
Zoom Video Communications has a Zacks Rank of #2 (Buy), while BlackLine has a Zacks Rank of #5 (Strong Sell) right now. This means that ZM'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.
ZM currently has a forward P/E ratio of 13.13, while BL has a forward P/E of 25.99. We also note that ZM has a PEG ratio of 3.10. 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. BL currently has a PEG ratio of 6.10.
Another notable valuation metric for ZM is its P/B ratio of 2.52. 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, BL has a P/B of 10.46.
These are just a few of the metrics contributing to ZM's Value grade of B and BL's Value grade of F.
ZM sticks out from BL in both our Zacks Rank and Style Scores models, so value investors will likely feel that ZM is the better option right now.
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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
BlackLine (BL) : Free Stock Analysis Report