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MEET vs. MIME: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Internet - Software stocks are likely familiar with Meet Group (MEET) and Mimecast (MIME). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Meet Group is sporting a Zacks Rank of #2 (Buy), while Mimecast has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MEET likely has seen a stronger improvement to its earnings outlook than MIME has recently. But this is just one factor that value investors are interested in.

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.

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.

MEET currently has a forward P/E ratio of 9.07, while MIME has a forward P/E of 85.79. We also note that MEET has a PEG ratio of 0.38. 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. MIME currently has a PEG ratio of 4.29.

Another notable valuation metric for MEET is its P/B ratio of 1.63. 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, MIME has a P/B of 12.57.

These metrics, and several others, help MEET earn a Value grade of A, while MIME has been given a Value grade of F.

MEET stands above MIME thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MEET is the superior value option right now.

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