CDW or NOW: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Computers - IT Services sector have probably already heard of CDW (CDW) and ServiceNow (NOW). 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.
CDW and ServiceNow are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that CDW likely has seen a stronger improvement to its earnings outlook than NOW has recently. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CDW currently has a forward P/E ratio of 20.40, while NOW has a forward P/E of 99.16. We also note that CDW has a PEG ratio of 1.56. 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. NOW currently has a PEG ratio of 3.60.
Another notable valuation metric for CDW is its P/B ratio of 15.62. 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, NOW has a P/B of 39.48.
These are just a few of the metrics contributing to CDW's Value grade of B and NOW's Value grade of F.
CDW has seen stronger estimate revision activity and sports more attractive valuation metrics than NOW, so it seems like value investors will conclude that CDW is the superior option right now.
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CDW Corporation (CDW) : Free Stock Analysis Report
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