HSTM or SIFY: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Internet - Services sector have probably already heard of HealthStream (HSTM) and Sify Technologies Limited (SIFY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

HealthStream and Sify Technologies Limited are sporting Zacks Ranks of #2 (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 HSTM is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

HSTM currently has a forward P/E ratio of 38.12, while SIFY has a forward P/E of 772.50. We also note that HSTM has a PEG ratio of 3.18. 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. SIFY currently has a PEG ratio of 38.63.

Another notable valuation metric for HSTM is its P/B ratio of 2.34. 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, SIFY has a P/B of 5.59.

These are just a few of the metrics contributing to HSTM's Value grade of B and SIFY's Value grade of C.

HSTM stands above SIFY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HSTM is the superior value option right now.

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

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