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Investors with an interest in Technology Services stocks have likely encountered both AstroNova (ALOT) and Telus International (TIXT). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
AstroNova has a Zacks Rank of #2 (Buy), while Telus International has a Zacks Rank of #3 (Hold) right now. This means that ALOT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 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.
ALOT currently has a forward P/E ratio of 14.04, while TIXT has a forward P/E of 37.85. We also note that ALOT has a PEG ratio of 1.17. 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. TIXT currently has a PEG ratio of 1.58.
Another notable valuation metric for ALOT is its P/B ratio of 1.48. 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, TIXT has a P/B of 5.92.
Based on these metrics and many more, ALOT holds a Value grade of A, while TIXT has a Value grade of C.
ALOT 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 ALOT is likely the superior value option right now.
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AstroNova, Inc. (ALOT) : Free Stock Analysis Report
TELUS International CDA Inc. (TIXT) : Free Stock Analysis Report
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