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ASGN vs. DT: Which Stock Should Value Investors Buy Now?

·2 min read

Investors looking for stocks in the Computers - IT Services sector might want to consider either ASGN Inc (ASGN) or Dynatrace (DT). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, ASGN Inc is sporting a Zacks Rank of #2 (Buy), while Dynatrace has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ASGN has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

ASGN currently has a forward P/E ratio of 16.47, while DT has a forward P/E of 43.66. We also note that ASGN has a PEG ratio of 1.07. 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. DT currently has a PEG ratio of 3.35.

Another notable valuation metric for ASGN is its P/B ratio of 2.92. 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, DT has a P/B of 7.33.

These are just a few of the metrics contributing to ASGN's Value grade of B and DT's Value grade of D.

ASGN 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 ASGN is likely the superior value option right now.


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ASGN Incorporated (ASGN) : Free Stock Analysis Report
 
Dynatrace, Inc. (DT) : Free Stock Analysis Report
 
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Zacks Investment Research