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CACI vs. PDFS: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Monotype (TYPE) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, CACI International has a Zacks Rank of #1 (Strong Buy), while PDF Solutions 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 CACI has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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 18.22, while PDFS has a forward P/E of 50.58. We also note that CACI has a PEG ratio of 1.82. 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 4.21.

Another notable valuation metric for CACI is its P/B ratio of 2.09. 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 2.12.

Based on these metrics and many more, CACI holds a Value grade of B, while PDFS has a Value grade of F.

CACI stands above PDFS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CACI is the superior value 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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