Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Software industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.
Why Focus on Undervalued Software Stocks?
Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.
AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.
What Goes Into AAII’s Value Grade?
Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.
AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.
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7 Undervalued Software Stocks
Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Software industry for Friday, February 23, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Software industry median.
| Company | Ticker | Price/Sales | Price/Earnings | EV/EBITDA | Shareholder Yield | Price/Book Value | Price/Free Cash Flow | Value Grade |
| Bridgeline Digital Inc | BLIN | 0.60 | na | na | 0.0% | 0.85 | na | B |
| CareCloud Inc | CCLD | 0.18 | na | 2.0 | (4.0%) | 0.25 | 1.5 | A |
| Ebix Inc | EBIXQ | 0.05 | 6.8 | 6.9 | 27.0% | 0.06 | 1.6 | A |
| Marin Software Inc | MRIN | 0.38 | na | 0.3 | (11.7%) | 0.38 | na | A |
| Upland Software Inc | UPLD | 0.47 | na | 10.6 | (2.9%) | 0.96 | 3.1 | B |
| Viewbix Inc | VBIX | 0.02 | na | 0.3 | (0.9%) | 0.08 | 1.1 | A |
| VIQ Solutions Inc | VQS | 0.08 | na | na | (18.5%) | 0.37 | na | B |
The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.
The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)
Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).
As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.
Bridgeline Digital Inc’s Value Grade
Value Grade:
| Metric | Score | BLIN | Industry Median |
| Price/Sales | 23 | 0.60 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | na | na | 24.3 |
| Shareholder Yield | 48 | 0.0% | (2.6%) |
| Price/Book Value | 24 | 0.85 | 3.47 |
| Price/Free Cash Flow | na | na | 35.1 |
Bridgeline Digital, Inc. is a marketing technology software company. Its Unbound platform is a digital platform that integrates Web content management, e-commerce, e-marketing, digital marketing, and Web analytics. It offers enterprise site search solutions with its Celebros Search and HawkSearch products. The Celebros Search is a commerce-oriented site search product that provides for natural language processing and incorporates artificial intelligence to present relevant search results based on long-tail keyword searches. HawkSearch is a site search, recommendation, and personalization application built for marketers, merchandisers, and developers to enhance online customer's content search. Its Woorank is a search engine optimization (SEO) audit tool that generates an instant performance audit of the site?s technical, on-page, and off-page SEO. Its TruPresence is a Web content management and e-commerce platform to support the needs of multi-unit organizations and franchises.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Bridgeline Digital Inc has a Value Score of 80, which is considered to be undervalued.
When you look at Bridgeline Digital Inc’s price-to-sales ratio at 0.60 compared to the industry median at 3.50, this company has a lower price relative to revenue compared to its peers. This could make Bridgeline Digital Inc’s stock more attractive for value investors.
Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bridgeline Digital Inc’s shareholder yield is higher than its industry median ratio of (2.56%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.
As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Bridgeline Digital Inc’s price-to-book ratio is lower than its industry median ratio of 3.47. This could make Bridgeline Digital Inc more attractive to investors looking for a new addition to their portfolio.
CareCloud Inc’s Value Grade
Value Grade:
| Metric | Score | CCLD | Industry Median |
| Price/Sales | 7 | 0.18 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | 6 | 2.0 | 24.3 |
| Shareholder Yield | 72 | (4.0%) | (2.6%) |
| Price/Book Value | 4 | 0.25 | 3.47 |
| Price/Free Cash Flow | 3 | 1.5 | 35.1 |
CareCloud, Inc. is a healthcare information technology company. The Company provides a suite of cloud-based solutions and related business services, to healthcare providers, from small practices to enterprise medical groups, hospitals, and health systems throughout the United States. Its segments include Healthcare IT and Medical Practice Management. Healthcare IT segment includes revenue cycle management and other services. Medical Practice Management segment includes the management of three medical practices. Its technology-enabled business solutions include revenue cycle management; Cloud-based software; Digital health; and Healthcare IT professional services & staffing. Its software-as-a-service platforms include practice management (PM), electronic health record (EHR), business intelligence, telehealth, patient experience management (PXM), and others. Its Revenue Cycle Management services including end-to-end medical billing, eligibility, analytics, and related services.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
CareCloud Inc has a Value Score of 97, which is considered to be undervalued.
CareCloud Inc’s price-to-book ratio is higher than its peers. This could make CareCloud Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about CareCloud Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Ebix Inc’s Value Grade
Value Grade:
| Metric | Score | EBIXQ | Industry Median |
| Price/Sales | 2 | 0.05 | 3.50 |
| Price/Earnings | 12 | 6.8 | 48.9 |
| EV/EBITDA | 32 | 6.9 | 24.3 |
| Shareholder Yield | 4 | 27.0% | (2.6%) |
| Price/Book Value | 1 | 0.06 | 3.47 |
| Price/Free Cash Flow | 3 | 1.6 | 35.1 |
Ebix, Inc. is a provider of on-demand infrastructure software exchanges and e-commerce services to the insurance, financial, travel, cash remittance and healthcare industries. In the insurance sector, the Company?s main focus is to develop and deploy globally a variety of insurance and reinsurance exchanges on an on-demand basis using software-as-a-service (SaaS) enterprise solutions in the areas of customer relationship management (CRM), front-end and back-end systems, and outsourced administrative and risk compliance. The Company?s EbixCash Financial exchange portfolio of software and services consists of domestic and international money remittance, foreign exchange (Forex), travel, pre-paid gift cards, utility payments, and lending and wealth management in India and other primarily Southeast Asian markets. It operates India's airport Forex business, with operations in approximately 20 international airports, including Delhi, Mumbai, Hyderabad, Chennai and Kolkata.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Ebix Inc has a Value Score of 99, which is considered to be undervalued.
Ebix Inc’s price-earnings ratio is 6.8 compared to the industry median at 48.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Ebix Inc more attractive for value investors.
Ebix Inc’s price-to-book ratio is higher than its peers. This could make Ebix Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about Ebix Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Marin Software Inc’s Value Grade
Value Grade:
| Metric | Score | MRIN | Industry Median |
| Price/Sales | 15 | 0.38 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | 1 | 0.3 | 24.3 |
| Shareholder Yield | 81 | (11.7%) | (2.6%) |
| Price/Book Value | 8 | 0.38 | 3.47 |
| Price/Free Cash Flow | na | na | 35.1 |
Marin Software Incorporated provides digital marketing software for search, social and eCommerce channels. It offers unified software-as-a-service (SaaS), an advertising management platform for advertisers and agencies. The Company?s platform offers analytics, workflow and optimization solution for marketing professionals, allowing users to manage their digital advertising spend. The Company's software solution is designed to help customers to measure the effectiveness of their advertising campaigns through reporting and analytics capabilities and manage and execute campaigns through an intuitive user interface and underlying technology that streamlines and automates key functions, such as advertisement creation and bidding, across multiple publishers and channels. Its software solutions also optimize campaigns across multiple publishers and channels based on market and business data to achieve desired revenue outcomes using predictive bid management technology.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Marin Software Inc has a Value Score of 89, which is considered to be undervalued.
Marin Software Inc’s price-to-book ratio is higher than its peers. This could make Marin Software Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about Marin Software Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Upland Software Inc’s Value Grade
Value Grade:
| Metric | Score | UPLD | Industry Median |
| Price/Sales | 19 | 0.47 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | 53 | 10.6 | 24.3 |
| Shareholder Yield | 69 | (2.9%) | (2.6%) |
| Price/Book Value | 28 | 0.96 | 3.47 |
| Price/Free Cash Flow | 6 | 3.1 | 35.1 |
Upland Software, Inc. provides cloud-based software applications. The Company?s applications are useful in various business functions, including marketing, sales, contact center, knowledge management, project management, information technology, business operations, and human resources and legal. Its applications interact with consumers across multiple channels to acquire new customers, drive product and service utilization, and resolve issues. It offers applications that help organizations optimize their sales opportunity and account management processes, coordinate proposal and reference activities, collaborate on the creation and publication of digital content and gain increased control over key sales and marketing workflows, activities and budgets. Its applications offer customer self-service products and voice of the customer (VoC) technology. It provides direct access to knowledge and to customer sentiment. It also provides knowledge management applications.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Upland Software Inc has a Value Score of 74, which is considered to be undervalued.
Upland Software Inc’s price-to-book ratio is higher than its peers. This could make Upland Software Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about Upland Software Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Viewbix Inc’s Value Grade
Value Grade:
| Metric | Score | VBIX | Industry Median |
| Price/Sales | 0 | 0.02 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | 1 | 0.3 | 24.3 |
| Shareholder Yield | 58 | (0.9%) | (2.6%) |
| Price/Book Value | 1 | 0.08 | 3.47 |
| Price/Free Cash Flow | 1 | 1.1 | 35.1 |
Viewbix Inc, formerly Virtual Crypto Technologies Inc, is an Israel-based video analytics and technology company. The Company provides Vsense, which is a video marketing platform. Vsense allows companies to drive a return on investment (ROI) from their videos while providing insights into viewer engagement. The Company enables users to create video players. It also offers solutions that incorporate templates and editing capabilities enabling subscribers to customize their videos with calls to action across digital platforms.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
Viewbix Inc has a Value Score of 99, which is considered to be undervalued.
Viewbix Inc’s price-to-book ratio is higher than its peers. This could make Viewbix Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about Viewbix Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
VIQ Solutions Inc’s Value Grade
Value Grade:
| Metric | Score | VQS | Industry Median |
| Price/Sales | 3 | 0.08 | 3.50 |
| Price/Earnings | na | na | 48.9 |
| EV/EBITDA | na | na | 24.3 |
| Shareholder Yield | 85 | (18.5%) | (2.6%) |
| Price/Book Value | 7 | 0.37 | 3.47 |
| Price/Free Cash Flow | na | na | 35.1 |
VIQ Solutions Inc. is a Canada-based global provider of secure, artificial intelligence (AI)-driven, digital voice and video capture technology and transcription services. The Company's modular software allows customers to integrate the platform at any stage of their organization's digitization, from the capture of digital content from video and audio devices through to online collaboration, mobility, data analytics, and integration with sensors, facial recognition, speech recognition and case management or patient record systems. It provides services to various industries, such as courts, law firms, law enforcement, insurance, government, corporate and finance, media broadcasting and transcription companies. The Company's solutions include CapturePro, CapturePro Mobile, MobileMic Pro, NetScribe, aiAssist, FirstDraft, Carbon, Lexel and AccessPoint. Its CapturePro solution captures, manages and shares official court records, police interrogations or insurance investigations.
Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.
VIQ Solutions Inc has a Value Score of 80, which is considered to be undervalued.
VIQ Solutions Inc’s price-to-book ratio is higher than its peers. This could make VIQ Solutions Inc less attractive for value investors when compared to the industry median at 3.47.
You can read more about VIQ Solutions Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.
Other Software Stock Grades
Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.
Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Software stocks as well as other industrys.
Choosing Which of the 7 Best Software Stocks Is Right for You
Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.
- Bridgeline Digital Inc stock has a Value Grade of B.
- CareCloud Inc stock has a Value Grade of A.
- Ebix Inc stock has a Value Grade of A.
- Marin Software Inc stock has a Value Grade of A.
- Upland Software Inc stock has a Value Grade of B.
- Viewbix Inc stock has a Value Grade of A.
- VIQ Solutions Inc stock has a Value Grade of B.
Now that you have a bit more background about each of the 7 undervalued stocks in the Software industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.
We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.
A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.
Additional Resources About Software Stocks
Want to learn more about Software stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.
- 7 Undervalued Software Stocks for Friday, February 23
- 5 Undervalued Software Stocks for Thursday, February 22
- What You Need to Know About Alarm.com Holdings Inc's Q4 Earnings
- What You Need to Know About American Software, Inc.'s Q3 Earnings
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We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.
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