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INFY vs. DT: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 mins read

Investors interested in stocks from the Computers - IT Services sector have probably already heard of Infosys (INFY) and Dynatrace (DT). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Infosys and Dynatrace are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that INFY likely has seen a stronger improvement to its earnings outlook than DT has recently. However, value investors will care about much more than just this.

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 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.

INFY currently has a forward P/E ratio of 23.41, while DT has a forward P/E of 108.68. We also note that INFY has a PEG ratio of 2.34. 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. DT currently has a PEG ratio of 4.29.

Another notable valuation metric for INFY is its P/B ratio of 6.06. 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, DT has a P/B of 12.70.

Based on these metrics and many more, INFY holds a Value grade of B, while DT has a Value grade of D.

INFY sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that INFY is the better option right now.


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Infosys Limited (INFY) : Free Stock Analysis Report
 
Dynatrace, Inc. (DT) : Free Stock Analysis Report
 
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