CRM vs. ADSK: Which Stock Is the Better Value Option?

Investors interested in stocks from the Internet - Software sector have probably already heard of Salesforce (CRM) and Autodesk (ADSK). But which of these two stocks presents investors with the better value opportunity right now? 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.

Currently, Salesforce has a Zacks Rank of #2 (Buy), while Autodesk has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CRM likely has seen a stronger improvement to its earnings outlook than ADSK has recently. But this is just one piece of the puzzle 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

CRM currently has a forward P/E ratio of 14.50, while ADSK has a forward P/E of 19.45. We also note that CRM has a PEG ratio of 0.85. 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. ADSK currently has a PEG ratio of 1.25.

Another notable valuation metric for CRM is its P/B ratio of 5.2. 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, ADSK has a P/B of 15.17.

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

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

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

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