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STNE vs. PYCR: Which Stock Is the Better Value Option?

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Investors with an interest in Internet - Software stocks have likely encountered both StoneCo Ltd. (STNE - Free Report) and Paycor HCM, Inc. (PYCR - Free Report) . 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, StoneCo Ltd. is sporting a Zacks Rank of #2 (Buy), while Paycor HCM, Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that STNE has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

STNE currently has a forward P/E ratio of 13.20, while PYCR has a forward P/E of 36.59. We also note that STNE has a PEG ratio of 0.62. 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. PYCR currently has a PEG ratio of 1.81.

Another notable valuation metric for STNE is its P/B ratio of 1.79. 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, PYCR has a P/B of 2.42.

These are just a few of the metrics contributing to STNE's Value grade of A and PYCR's Value grade of F.

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


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