Investors interested in Technology Services stocks are likely familiar with ScanSource (SCSC) and Symbotic Inc. (SYM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
ScanSource and Symbotic Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SCSC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
SCSC currently has a forward P/E ratio of 12.67, while SYM has a forward P/E of 72.41. We also note that SCSC has a PEG ratio of 0.84. 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. SYM currently has a PEG ratio of 2.41.
Another notable valuation metric for SCSC is its P/B ratio of 1.29. 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, SYM has a P/B of 22.37.
Based on these metrics and many more, SCSC holds a Value grade of A, while SYM has a Value grade of F.
SCSC has seen stronger estimate revision activity and sports more attractive valuation metrics than SYM, so it seems like value investors will conclude that SCSC is the superior option right now.
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ScanSource, Inc. (SCSC): Free Stock Analysis Report
Symbotic Inc. (SYM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).