Investors looking for stocks in the Business - Software Services sector might want to consider either Synnex (SNX) or Cognizant (CTSH). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Synnex has a Zacks Rank of #2 (Buy), while Cognizant has a Zacks Rank of #4 (Sell). This means that SNX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
SNX currently has a forward P/E ratio of 7.94, while CTSH has a forward P/E of 16.85. We also note that SNX has a PEG ratio of 0.66. 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. CTSH currently has a PEG ratio of 1.67.
Another notable valuation metric for SNX is its P/B ratio of 1.39. 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, CTSH has a P/B of 3.37.
These are just a few of the metrics contributing to SNX's Value grade of A and CTSH's Value grade of C.
SNX has seen stronger estimate revision activity and sports more attractive valuation metrics than CTSH, so it seems like value investors will conclude that SNX is the superior option right now.
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SYNNEX Corporation (SNX) : Free Stock Analysis Report
Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report
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