Investors interested in stocks from the Computers - IT Services sector have probably already heard of Infosys (INFY) and CoStar Group (CSGP). 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Infosys has a Zacks Rank of #2 (Buy), while CoStar Group has a Zacks Rank of #3 (Hold) right now. This means that INFY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
INFY currently has a forward P/E ratio of 19.71, while CSGP has a forward P/E of 61.48. We also note that INFY has a PEG ratio of 2.08. 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. CSGP currently has a PEG ratio of 4.10.
Another notable valuation metric for INFY is its P/B ratio of 5.37. 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, CSGP has a P/B of 7.11.
These are just a few of the metrics contributing to INFY's Value grade of B and CSGP's Value grade of F.
INFY has seen stronger estimate revision activity and sports more attractive valuation metrics than CSGP, so it seems like value investors will conclude that INFY is the superior option right now.
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Infosys Limited (INFY) : Free Stock Analysis Report
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