DOX or DT: Which Is the Better Value Stock Right Now?
Investors with an interest in Computers - IT Services stocks have likely encountered both Amdocs (DOX) and Dynatrace (DT). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Amdocs and Dynatrace are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DOX is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
DOX currently has a forward P/E ratio of 13.65, while DT has a forward P/E of 44.44. We also note that DOX has a PEG ratio of 1.19. 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. DT currently has a PEG ratio of 2.32.
Another notable valuation metric for DOX is its P/B ratio of 2.97. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, DT has a P/B of 7.18.
These are just a few of the metrics contributing to DOX's Value grade of B and DT's Value grade of D.
DOX has seen stronger estimate revision activity and sports more attractive valuation metrics than DT, so it seems like value investors will conclude that DOX is the superior option right now.
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Amdocs Limited (DOX) : Free Stock Analysis Report
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