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DELL vs. WIX: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors interested in stocks from the Computers - IT Services sector have probably already heard of Dell Technologies (DELL) and Wix.com (WIX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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 Wix.com has a Zacks Rank of #4 (Sell). This means that DELL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DELL currently has a forward P/E ratio of 9.71, while WIX has a forward P/E of 1,397.76. We also note that DELL has a PEG ratio of 0.81. 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. WIX currently has a PEG ratio of 59.81.

Another notable valuation metric for DELL is its P/B ratio of 9.15. 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, WIX has a P/B of 52.66.

These metrics, and several others, help DELL earn a Value grade of A, while WIX has been given a Value grade of F.

DELL stands above WIX 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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Zacks Investment Research