Investors interested in Technology Services stocks are likely familiar with V2X (VVX) and Everpure (P). 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.
V2X has a Zacks Rank of #1 (Strong Buy), while Everpure has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VVX is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
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.
VVX currently has a forward P/E ratio of 12.28, while P has a forward P/E of 28.19. We also note that VVX has a PEG ratio of 0.60. 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. P currently has a PEG ratio of 1.46.
Another notable valuation metric for VVX is its P/B ratio of 2.15. 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, P has a P/B of 15.98.
These metrics, and several others, help VVX earn a Value grade of A, while P has been given a Value grade of D.
VVX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that VVX is likely the superior value option right now.
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V2X, Inc. (VVX): Free Stock Analysis Report
Everpure, Inc. (P): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).