BILL vs. FFIV: Which Stock Is the Better Value Option?

Investors interested in Internet - Software stocks are likely familiar with BILL Holdings (BILL) and F5 Networks (FFIV). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, BILL Holdings has a Zacks Rank of #1 (Strong Buy), while F5 Networks has a Zacks Rank of #3 (Hold). This means that BILL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

BILL currently has a forward P/E ratio of 13.36, while FFIV has a forward P/E of 22.55. We also note that BILL has a PEG ratio of 0.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FFIV currently has a PEG ratio of 3.01.

Another notable valuation metric for BILL is its P/B ratio of 1.39. 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, FFIV has a P/B of 5.71.

Based on these metrics and many more, BILL holds a Value grade of B, while FFIV has a Value grade of D.

BILL stands above FFIV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BILL is the superior value option right now.

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

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