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

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Investors interested in Internet - Software stocks are likely familiar with Alight, Inc. (ALIT - Free Report) and F5 Networks (FFIV - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Alight, Inc. has a Zacks Rank of #2 (Buy), while F5 Networks 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 ALIT has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

ALIT currently has a forward P/E ratio of 9.67, while FFIV has a forward P/E of 13.25. We also note that ALIT has a PEG ratio of 0.83. 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. FFIV currently has a PEG ratio of 1.70.

Another notable valuation metric for ALIT is its P/B ratio of 0.89. 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 3.36.

These metrics, and several others, help ALIT earn a Value grade of B, while FFIV has been given a Value grade of C.

ALIT has seen stronger estimate revision activity and sports more attractive valuation metrics than FFIV, so it seems like value investors will conclude that ALIT is the superior option right now.


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