MGNI vs. BL: Which Stock Is the Better Value Option?

Investors interested in Internet - Software stocks are likely familiar with Magnite (MGNI) and BlackLine (BL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Right now, Magnite is sporting a Zacks Rank of #2 (Buy), while BlackLine has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MGNI is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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.

MGNI currently has a forward P/E ratio of 12.85, while BL has a forward P/E of 14.82. We also note that MGNI has a PEG ratio of 0.47. 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. BL currently has a PEG ratio of 1.08.

Another notable valuation metric for MGNI is its P/B ratio of 2.12. 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, BL has a P/B of 6.31.

These are just a few of the metrics contributing to MGNI's Value grade of A and BL's Value grade of C.

MGNI stands above BL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MGNI is the superior value option right now.