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RXT vs. TRI: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Technology Services sector have probably already heard of Rackspace (RXT) and Thomson Reuters (TRI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Rackspace is sporting a Zacks Rank of #2 (Buy), while Thomson Reuters has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that RXT likely has seen a stronger improvement to its earnings outlook than TRI has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

RXT currently has a forward P/E ratio of 14.12, while TRI has a forward P/E of 61.87. We also note that RXT has a PEG ratio of 1.09. 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. TRI currently has a PEG ratio of 5.14.

Another notable valuation metric for RXT is its P/B ratio of 2.02. 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, TRI has a P/B of 3.74.

These metrics, and several others, help RXT earn a Value grade of A, while TRI has been given a Value grade of D.

RXT stands above TRI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RXT is the superior value option right now.


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Rackspace Technology, Inc. (RXT) : Free Stock Analysis Report
 
Thomson Reuters Corp (TRI) : Free Stock Analysis Report
 
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