Is DXC Technology (DXC) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is DXC Technology (DXC). DXC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.57, while its industry has an average P/E of 27.93. Over the past 52 weeks, DXC's Forward P/E has been as high as 12.97 and as low as 9.43, with a median of 11.35.
Investors should also note that DXC holds a PEG ratio of 1.46. 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. DXC's PEG compares to its industry's average PEG of 2.82. Over the last 12 months, DXC's PEG has been as high as 1.57 and as low as 0.90, with a median of 1.11.
Finally, our model also underscores that DXC has a P/CF ratio of 6.56. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 22.33. Within the past 12 months, DXC's P/CF has been as high as 26.86 and as low as 5.92, with a median of 11.19.
These figures are just a handful of the metrics value investors tend to look at, but they help show that DXC Technology is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DXC feels like a great value stock at the moment.
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