SIFY or SHOP: Which Is the Better Value Stock Right Now?
Investors with an interest in Internet - Services stocks have likely encountered both Sify Technologies Limited (SIFY) $Sify(SIFY)$ and Shopify (SHOP) $Shopify(SHOP)$ . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Sify Technologies Limited has a Rank of #2 (Buy), while Shopify has a Rank of #3 (Hold). The Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SIFY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
SIFY currently has a forward P/E ratio of 21.10, while SHOP has a forward P/E of 430.22. We also note that SIFY has a PEG ratio of 1.06. 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. SHOP currently has a PEG ratio of 18.18.
Another notable valuation metric for SIFY is its P/B ratio of 2.02. 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, SHOP has a P/B of 4.68.
These metrics, and several others, help SIFY earn a Value grade of A, while SHOP has been given a Value grade of D.
SIFY is currently sporting an improving earnings outlook, which makes it stick out in our Rank model. And, based on the above valuation metrics, we feel that SIFY is likely the superior value option right now.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
source:nasdaq
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