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CORE vs. SPSC: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
Abbott (ABT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors interested in stocks from the Business - Services sector have probably already heard of Core-Mark (CORE) and SPS Commerce (SPSC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Core-Mark and SPS Commerce are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CORE is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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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.

CORE currently has a forward P/E ratio of 27.92, while SPSC has a forward P/E of 50.77. We also note that CORE has a PEG ratio of 2.15. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SPSC currently has a PEG ratio of 2.54.

Another notable valuation metric for CORE is its P/B ratio of 2.93. 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, SPSC has a P/B of 5.04.

These metrics, and several others, help CORE earn a Value grade of B, while SPSC has been given a Value grade of F.

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


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Core-Mark Holding Company, Inc. (CORE) : Free Stock Analysis Report
 
SPS Commerce, Inc. (SPSC) : Free Stock Analysis Report
 
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