Investors with an interest in Computers - IT Services stocks have likely encountered both Amdocs (DOX) and Wix.com (WIX). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Right now, Amdocs is sporting a Zacks Rank of #2 (Buy), while Wix.com has a Zacks Rank of #3 (Hold). This means that DOX'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 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.
DOX currently has a forward P/E ratio of 14.67, while WIX has a forward P/E of 247.73. We also note that DOX has a PEG ratio of 1.73. 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. WIX currently has a PEG ratio of 4.71.
Another notable valuation metric for DOX is its P/B ratio of 2.40. 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, WIX has a P/B of 53.94.
Based on these metrics and many more, DOX holds a Value grade of A, while WIX has a Value grade of F.
DOX has seen stronger estimate revision activity and sports more attractive valuation metrics than WIX, 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
Wix.com Ltd. (WIX) : Free Stock Analysis Report
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