Investors looking for stocks in the Computers – IT Services sector might want to consider either DXC Technology Company. (DXC) or Epam (EPAM). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
DXC Technology Company. has a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DXC has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
DXC currently has a forward P/E ratio of 8.98, while EPAM has a forward P/E of 80.91. We also note that DXC has a PEG ratio of 0.33. 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. EPAM currently has a PEG ratio of 3.05.
Another notable valuation metric for DXC is its P/B ratio of 1.54. 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, EPAM has a P/B of 17.33.
These are just a few of the metrics contributing to DXC’s Value grade of A and EPAM’s Value grade of D.
DXC sticks out from EPAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that DXC is the better option right now.
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