Investors interested in stocks from the Business - Information Services sector have probably already heard of FactSet Research (FDS) and Verisk Analytics (VRSK). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, FactSet Research has a Zacks Rank of #2 (Buy), while Verisk Analytics has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FDS has an improving earnings outlook. 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.
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.
FDS currently has a forward P/E ratio of 12.00, while VRSK has a forward P/E of 21.55. We also note that FDS has a PEG ratio of 1.84. 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. VRSK currently has a PEG ratio of 2.06.
Another notable valuation metric for FDS is its P/B ratio of 3.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, VRSK has a P/B of 73.91.
Based on these metrics and many more, FDS holds a Value grade of B, while VRSK has a Value grade of C.
FDS has seen stronger estimate revision activity and sports more attractive valuation metrics than VRSK, so it seems like value investors will conclude that FDS is the superior option right now.
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FactSet Research Systems Inc. (FDS): Free Stock Analysis Report
Verisk Analytics, Inc. (VRSK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).