Investors interested in stocks from the Technology Services sector have probably already heard of Qifu Technology, Inc. (QFIN) and Amplitude, Inc. (AMPL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Qifu Technology, Inc. has a Zacks Rank of #1 (Strong Buy), while Amplitude, Inc. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that QFIN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
QFIN currently has a forward P/E ratio of 6.86, while AMPL has a forward P/E of 151.83. We also note that QFIN has a PEG ratio of 0.47. 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. AMPL currently has a PEG ratio of 4.65.
Another notable valuation metric for QFIN is its P/B ratio of 1.80. 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, AMPL has a P/B of 3.92.
These metrics, and several others, help QFIN earn a Value grade of A, while AMPL has been given a Value grade of F.
QFIN stands above AMPL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that QFIN is the superior value option right now.
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