FDS vs. VRSK: Which Stock Should Value Investors Buy Now?

Investors interested in Business - Information Services stocks are likely familiar with FactSet Research (FDS) and Verisk Analytics (VRSK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

FactSet Research and Verisk Analytics are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FDS has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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 12.69, while VRSK has a forward P/E of 27.58. We also note that FDS has a PEG ratio of 2.28. 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 2.63.

Another notable valuation metric for FDS is its P/B ratio of 3.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, VRSK has a P/B of 94.6.

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

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.