Investors with an interest in Computer - Networking stocks have likely encountered both Digi International (DGII) and Cisco Systems (CSCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Currently, Digi International has a Zacks Rank of #2 (Buy), while Cisco Systems has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DGII is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

DGII currently has a forward P/E ratio of 14.42, while CSCO has a forward P/E of 16.22. We also note that DGII has a PEG ratio of 0.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CSCO currently has a PEG ratio of 3.18.

Another notable valuation metric for DGII is its P/B ratio of 1.80. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CSCO has a P/B of 5.27.

These metrics, and several others, help DGII earn a Value grade of B, while CSCO has been given a Value grade of D.

DGII is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DGII is likely the superior value option right now.

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Digi International Inc. (DGII) : Free Stock Analysis Report

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

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