Investors interested in Computers - IT Services stocks are likely familiar with Dell Technologies (DELL) and CoStar Group (CSGP). 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.
Currently, Dell Technologies has a Zacks Rank of #2 (Buy), while CoStar Group 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 DELL has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
DELL currently has a forward P/E ratio of 8.01, while CSGP has a forward P/E of 41.75. We also note that DELL has a PEG ratio of 0.67. 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. CSGP currently has a PEG ratio of 2.49.
Another notable valuation metric for DELL is its P/B ratio of 2.96. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CSGP has a P/B of 5.09.
Based on these metrics and many more, DELL holds a Value grade of A, while CSGP has a Value grade of F.
DELL stands above CSGP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DELL is the superior value option right now.
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Dell Technologies Inc. (DELL) : Free Stock Analysis Report
CoStar Group, Inc. (CSGP) : Free Stock Analysis Report
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