Investors interested in stocks from the Internet - Software sector have probably already heard of StoneCo Ltd. (STNE) and Informatica Inc. (INFA). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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, StoneCo Ltd. has a Zacks Rank of #1 (Strong Buy), while Informatica Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that STNE likely has seen a stronger improvement to its earnings outlook than INFA has recently. However, value investors will care about much more than just this.

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.

STNE currently has a forward P/E ratio of 10.04, while INFA has a forward P/E of 16.54. We also note that STNE has a PEG ratio of 0.38. 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. INFA currently has a PEG ratio of 2.18.

Another notable valuation metric for STNE is its P/B ratio of 2.03. 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, INFA has a P/B of 2.59.

These metrics, and several others, help STNE earn a Value grade of B, while INFA has been given a Value grade of C.

STNE is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STNE is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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