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VNET or AKAM: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Internet - Services sector have probably already heard of 21Vianet (VNET - Free Report) and Akamai Technologies (AKAM - 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.

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.

21Vianet and Akamai Technologies are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that VNET likely has seen a stronger improvement to its earnings outlook than AKAM has recently. But this is just one piece of the puzzle 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.

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.

VNET currently has a forward P/E ratio of 14.23, while AKAM has a forward P/E of 15.27. We also note that VNET has a PEG ratio of 0.41. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AKAM currently has a PEG ratio of 3.20.

Another notable valuation metric for VNET is its P/B ratio of 0.62. 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, AKAM has a P/B of 3.15.

Based on these metrics and many more, VNET holds a Value grade of B, while AKAM has a Value grade of C.

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


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