Investors with an interest in Internet - Software stocks have likely encountered both Flywire (FLYW) and Cloudflare (NET). 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.
Flywire and Cloudflare are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FLYW has an improving earnings outlook. But this is only part of the picture 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 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.
FLYW currently has a forward P/E ratio of 33.25, while NET has a forward P/E of 209.19. We also note that FLYW has a PEG ratio of 0.95. 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. NET currently has a PEG ratio of 7.80.
Another notable valuation metric for FLYW is its P/B ratio of 2.01. 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, NET has a P/B of 57.37.
These metrics, and several others, help FLYW earn a Value grade of B, while NET has been given a Value grade of F.
FLYW stands above NET thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FLYW is the superior value option right now.
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Flywire Corporation (FLYW): Free Stock Analysis Report
Cloudflare, Inc. (NET): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).