Investors with an interest in Computers - IT Services stocks have likely encountered both Presidio (PSDO) and Amdocs (DOX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Presidio has a Zacks Rank of #2 (Buy), while Amdocs has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PSDO likely has seen a stronger improvement to its earnings outlook than DOX has recently. But this is just one factor that value investors are interested in.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PSDO currently has a forward P/E ratio of 9.60, while DOX has a forward P/E of 14.24. We also note that PSDO has a PEG ratio of 1.20. 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. DOX currently has a PEG ratio of 1.68.
Another notable valuation metric for PSDO is its P/B ratio of 1.93. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DOX has a P/B of 2.41.
These are just a few of the metrics contributing to PSDO's Value grade of B and DOX's Value grade of C.
PSDO stands above DOX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PSDO is the superior value option right now.
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