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CTSH vs. TYL: Which Stock Is the Better Value Option?

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·2 min read
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  • TYL
  • CTSH

Investors interested in stocks from the Business - Software Services sector have probably already heard of Cognizant (CTSH) and Tyler Technologies (TYL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Cognizant has a Zacks Rank of #2 (Buy), while Tyler Technologies has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CTSH 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CTSH currently has a forward P/E ratio of 20.17, while TYL has a forward P/E of 72.10. We also note that CTSH has a PEG ratio of 1.83. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TYL currently has a PEG ratio of 4.81.

Another notable valuation metric for CTSH is its P/B ratio of 3.88. 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, TYL has a P/B of 8.98.

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

CTSH has seen stronger estimate revision activity and sports more attractive valuation metrics than TYL, so it seems like value investors will conclude that CTSH is the superior option right now.


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Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report
 
Tyler Technologies, Inc. (TYL) : Free Stock Analysis Report
 
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