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HPE vs. ITI: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Computer - Integrated Systems sector have probably already heard of Hewlett Packard Enterprise (HPE) and Iteris (ITI). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Hewlett Packard Enterprise has a Zacks Rank of #2 (Buy), while Iteris 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 HPE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HPE currently has a forward P/E ratio of 7.86, while ITI has a forward P/E of 25.39. We also note that HPE has a PEG ratio of 0.96. 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. ITI currently has a PEG ratio of 1.69.

Another notable valuation metric for HPE is its P/B ratio of 1.15. 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, ITI has a P/B of 2.90.

These metrics, and several others, help HPE earn a Value grade of A, while ITI has been given a Value grade of C.

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


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Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report
 
Iteris, Inc. (ITI): Free Stock Analysis Report
 
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