Which stocks should value investors buy now?

Investors interested in Internet software stocks are likely familiar with E2open Parent Holdings, Inc. (ETWO) and Informatica Inc. (INFA). But which of these two stocks currently offers value investors the better value for money? We need to take a closer look.

The best way to find good value stocks is to combine a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank places an emphasis on earnings estimates and estimate revisions, while our Style Scores aim to identify stocks with specific traits.

Currently, E2open Parent Holdings, Inc. has a Zacks Rank of #2 (Buy), while Informatica Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that ETWO has an improving earnings outlook. But that’s only one piece of the puzzle for value investors.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

ETWO currently has a forward P/E ratio of 21.79, while INFA has a forward P/E ratio of 25.29. We also note that ETWO has a PEG ratio of 1.31. This figure is similar to the commonly used P/E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. INFA currently has a PEG ratio of 3.28.

Another important valuation metric for ETWO is its P/B ratio of 0.89. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, INFA has a P/B ratio of 3.66.

These are just some of the metrics that contribute to the B rating for ETWO and the D rating for INFA.

ETWO is above INFA thanks to its solid earnings prospects and based on these valuation numbers, we also believe that ETWO is the better value option currently.

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E2open Parent Holdings, Inc. (ETWO): Free Stock Analysis Report

Informatica Inc. (INFA): Free Stock Analysis Report

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