Investors with an interest in Internet - Software stocks have likely encountered both MiX Telematics Limited (MIXT) and Mimecast (MIME). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
MiX Telematics Limited has a Zacks Rank of #2 (Buy), while Mimecast has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MIXT is likely seeing its earnings outlook improve to a greater extent. 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.
MIXT currently has a forward P/E ratio of 16.63, while MIME has a forward P/E of 108.35. We also note that MIXT has a PEG ratio of 0.67. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MIME currently has a PEG ratio of 5.42.
Another notable valuation metric for MIXT is its P/B ratio of 2.55. 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, MIME has a P/B of 14.60.
These metrics, and several others, help MIXT earn a Value grade of B, while MIME has been given a Value grade of F.
MIXT stands above MIME thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MIXT is the superior value option right now.
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