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SNX vs. WIT: Which Stock Is the Better Value Option?

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Investors interested in Business - Software Services stocks are likely familiar with Synnex (SNX) and Wipro Limited (WIT). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Synnex has a Zacks Rank of #2 (Buy), while Wipro Limited has a Zacks Rank of #3 (Hold) right now. 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 only part of the picture for value investors.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SNX currently has a forward P/E ratio of 14.91, while WIT has a forward P/E of 30.92. We also note that SNX has a PEG ratio of 1.44. 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. WIT currently has a PEG ratio of 3.44.

Another notable valuation metric for SNX is its P/B ratio of 2.88. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WIT has a P/B of 6.37.

These metrics, and several others, help SNX earn a Value grade of A, while WIT has been given a Value grade of C.

SNX has seen stronger estimate revision activity and sports more attractive valuation metrics than WIT, so it seems like value investors will conclude that SNX is the superior option right now.


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