Yahoo Finance CHGG or SMAR: Which Is the Better Value Stock Right Now?
Investors with an interest in Internet - Software stocks have likely encountered both Chegg (CHGG) and Smartsheet (SMAR). 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.
Currently, Chegg has a Zacks Rank of #2 (Buy), while Smartsheet has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CHGG has an improving earnings outlook. But this is only part of the picture for value investors.
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.
CHGG currently has a forward P/E ratio of 2.95, while SMAR has a forward P/E of 34.81. We also note that CHGG has a PEG ratio of 0.15. 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. SMAR currently has a PEG ratio of 1.03.
Another notable valuation metric for CHGG is its P/B ratio of 0.31. 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, SMAR has a P/B of 9.53.
These are just a few of the metrics contributing to CHGG's Value grade of A and SMAR's Value grade of D.
CHGG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CHGG is likely the superior value option right now.
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Chegg, Inc. (CHGG) : Free Stock Analysis Report
Smartsheet (SMAR) : Free Stock Analysis Report
