PRSP vs. NOW: Which Stock Is the Better Value Option?
Investors looking for stocks in the Computers – IT Services sector might want to consider either PERSPECTA INC (PRSP) or ServiceNow (NOW). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, PERSPECTA INC is sporting a Zacks Rank of #2 (Buy), while ServiceNow has a Zacks Rank of #3 (Hold). This means that PRSP’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PRSP currently has a forward P/E ratio of 12.23, while NOW has a forward P/E of 77.67. We also note that PRSP has a PEG ratio of 2.45. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. NOW currently has a PEG ratio of 2.99.
Another notable valuation metric for PRSP is its P/B ratio of 1.76. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. By comparison, NOW has a P/B of 36.34.
Based on these metrics and many more, PRSP holds a Value grade of A, while NOW has a Value grade of F.
PRSP has seen stronger estimate revision activity and sports more attractive valuation metrics than NOW, so it seems like value investors will conclude that PRSP is the superior option right now.
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PERSPECTA INC (PRSP): Free Stock Analysis Report
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