Investors looking for stocks in the Internet - Software sector might want to consider either 8x8 (EGHT) or Smartsheet (SMAR). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

8x8 has a Zacks Rank of #1 (Strong Buy), while Smartsheet has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EGHT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

EGHT currently has a forward P/E ratio of 9.37, while SMAR has a forward P/E of 40.33. We also note that EGHT has a PEG ratio of 0.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SMAR currently has a PEG ratio of 1.28.

Another notable valuation metric for EGHT is its P/B ratio of 3.67. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SMAR has a P/B of 11.60.

These are just a few of the metrics contributing to EGHT's Value grade of B and SMAR's Value grade of F.

EGHT sticks out from SMAR in both our Zacks Rank and Style Scores models, so value investors will likely feel that EGHT is the better option right now.

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