OSPN or ZM: Which Is the Better Value Stock Right Now?

Investors interested in Internet - Software stocks are likely familiar with OneSpan (OSPN) and Zoom Communications (ZM). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, OneSpan is sporting a Zacks Rank of #2 (Buy), while Zoom Communications has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OSPN likely has seen a stronger improvement to its earnings outlook than ZM has recently. But this is just one factor that value investors are interested in.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

OSPN currently has a forward P/E ratio of 10.89, while ZM has a forward P/E of 18.00. We also note that OSPN has a PEG ratio of 0.99. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZM currently has a PEG ratio of 4.06.

Another notable valuation metric for OSPN is its P/B ratio of 1.79. 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, ZM has a P/B of 3.17.

Based on these metrics and many more, OSPN holds a Value grade of A, while ZM has a Value grade of C.

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

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This article originally published on Zacks Investment Research (zacks.com).

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