APPS vs. ADSK: Which of These Stocks Offers Greater Value?

Comparing Digital Turbine and Autodesk: Which Internet Software Stock Offers Better Value?

For those considering investments in the Internet software sector, Digital Turbine (APPS) and Autodesk (ADSK) are two names that often come up. But which one stands out as the stronger value pick? Let's examine their fundamentals to find out.

Evaluating Value Stocks: The Zacks Approach

To identify compelling value stocks, investors often look for a combination of a high Zacks Rank and a strong Value score within the Zacks Style Scores system. The Zacks Rank prioritizes changes and trends in earnings estimates, while the Style Scores highlight stocks with specific characteristics that appeal to value-focused investors.

Current Rankings and Earnings Outlook

At present, Digital Turbine holds a Zacks Rank of #2 (Buy), whereas Autodesk is rated at #4 (Sell). This suggests that Digital Turbine has experienced more favorable revisions to its earnings forecasts compared to Autodesk. However, value investors typically consider a broader range of factors beyond just earnings outlooks.

Key Value Metrics

Value investors often rely on established financial ratios to spot undervalued opportunities. Some of the most commonly used metrics include the price-to-earnings (P/E) ratio, price-to-sales (P/S) ratio, earnings yield, cash flow per share, and other financial fundamentals.

• Forward P/E Ratio: Digital Turbine's forward P/E stands at 10.78, while Autodesk's is higher at 19.59.
• PEG Ratio: APPS has a PEG ratio of 0.26, reflecting its expected earnings growth, compared to ADSK's PEG ratio of 1.15.
• P/B Ratio: Digital Turbine's price-to-book ratio is 2.24, whereas Autodesk's is significantly higher at 16.47.

These figures, among others, contribute to Digital Turbine earning a Value grade of B, while Autodesk receives a D in the same category.

Which Stock Is the Better Value?

Based on both the Zacks Rank and Style Scores, Digital Turbine appears to be the more attractive choice for value-oriented investors at this time.