Investors interested in stocks from the Technology Services sector have probably already heard of Blucora (BCOR) and Thomson Reuters (TRI). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Blucora has a Zacks Rank of #2 (Buy), while Thomson Reuters has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BCOR 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.
BCOR currently has a forward P/E ratio of 6.25, while TRI has a forward P/E of 38.39. We also note that BCOR has a PEG ratio of 0.31. 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. TRI currently has a PEG ratio of 3.06.
Another notable valuation metric for BCOR is its P/B ratio of 1.10. 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, TRI has a P/B of 3.74.
Based on these metrics and many more, BCOR holds a Value grade of A, while TRI has a Value grade of D.
BCOR 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 BCOR is likely the superior value option right now.
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