Investors interested in stocks from the Computers - IT Services sector have probably already heard of SAIC (SAIC) and CoStar Group (CSGP). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
SAIC has a Zacks Rank of #2 (Buy), while CoStar Group has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SAIC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SAIC currently has a forward P/E ratio of 14.85, while CSGP has a forward P/E of 59.37. We also note that SAIC has a PEG ratio of 2.70. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CSGP currently has a PEG ratio of 3.96.
Another notable valuation metric for SAIC is its P/B ratio of 3.27. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CSGP has a P/B of 6.84.
These are just a few of the metrics contributing to SAIC's Value grade of B and CSGP's Value grade of F.
SAIC has seen stronger estimate revision activity and sports more attractive valuation metrics than CSGP, so it seems like value investors will conclude that SAIC is the superior option right now.
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Science Applications International Corporation (SAIC) : Free Stock Analysis Report
CoStar Group, Inc. (CSGP) : Free Stock Analysis Report
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