Investors interested in Internet – Software stocks are likely familiar with Magnite (MGNI) and BlackLine (BL). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Magnite and BlackLine have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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.
MGNI currently has a forward P/E ratio of 24.61, while BL has a forward P/E of 28.84. We also note that MGNI has a PEG ratio of 0.66. 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. BL currently has a PEG ratio of 6.77.
Another notable valuation metric for MGNI is its P/B ratio of 3.39. 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, BL has a P/B of 10.63.
Based on these metrics and many more, MGNI holds a Value grade of B, while BL has a Value grade of D.
Both MGNI and BL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MGNI is the superior value option right now.
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