NICE vs. ZM: Which Stock Is the Better Value Option?

Investors interested in Internet - Software stocks are likely familiar with Nice (NICE) and Zoom Communications (ZM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Nice has a Zacks Rank of #2 (Buy), while Zoom Communications has a Zacks Rank of #3 (Hold). This means that NICE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

NICE currently has a forward P/E ratio of 9.07, while ZM has a forward P/E of 15.94. We also note that NICE has a PEG ratio of 0.85. 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. ZM currently has a PEG ratio of 3.59.

Another notable valuation metric for NICE is its P/B ratio of 1.6. 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, ZM has a P/B of 2.89.

Based on these metrics and many more, NICE holds a Value grade of A, while ZM has a Value grade of C.

NICE sticks out from ZM in both our Zacks Rank and Style Scores models, so value investors will likely feel that NICE is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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