Investors interested in stocks from the Technology Services sector have probably already heard of TTEC Holdings (TTEC) and MeridianLink (MLNK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Currently, TTEC Holdings has a Zacks Rank of #2 (Buy), while MeridianLink 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 TTEC has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
TTEC currently has a forward P/E ratio of 4.58, while MLNK has a forward P/E of 48.78. We also note that TTEC has a PEG ratio of 0.27. 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. MLNK currently has a PEG ratio of 1.65.
Another notable valuation metric for TTEC is its P/B ratio of 0.87. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MLNK has a P/B of 3.14.
Based on these metrics and many more, TTEC holds a Value grade of B, while MLNK has a Value grade of F.
TTEC stands above MLNK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TTEC is the superior value option right now.
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TeleTech Holdings, Inc. (TTEC) : Free Stock Analysis Report
MeridianLink, Inc. (MLNK) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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