Investors looking for stocks in the Computer - Services sector might want to consider either CACI International (CACI) or PDF Solutions (PDFS). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
CACI International and PDF Solutions are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that CACI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CACI currently has a forward P/E ratio of 17.71, while PDFS has a forward P/E of 51.35. We also note that CACI has a PEG ratio of 1.77. 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. PDFS currently has a PEG ratio of 4.28.
Another notable valuation metric for CACI is its P/B ratio of 2.02. 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, PDFS has a P/B of 2.16.
These metrics, and several others, help CACI earn a Value grade of B, while PDFS has been given a Value grade of F.
CACI sticks out from PDFS in both our Zacks Rank and Style Scores models, so value investors will likely feel that CACI is the better option right now.
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CACI International, Inc. (CACI) : Free Stock Analysis Report
PDF Solutions, Inc. (PDFS) : Free Stock Analysis Report
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