FDS vs. VRSK: Which Stock Is the Better Value Option?

Investors with an interest in Business - Information Services stocks have likely encountered both FactSet Research (FDS) and Verisk Analytics (VRSK). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, FactSet Research has a Zacks Rank of #2 (Buy), while Verisk Analytics has a Zacks Rank of #3 (Hold). This means that FDS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

FDS currently has a forward P/E ratio of 11.13, while VRSK has a forward P/E of 24.27. We also note that FDS has a PEG ratio of 1.98. 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. VRSK currently has a PEG ratio of 2.32.

Another notable valuation metric for FDS is its P/B ratio of 3.32. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, VRSK has a P/B of 83.25.

These are just a few of the metrics contributing to FDS's Value grade of B and VRSK's Value grade of C.

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

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FactSet Research Systems Inc. (FDS): Free Stock Analysis Report

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

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