Investors interested in stocks from the Computers - IT Services sector have probably already heard of Genpact (G) and Dynatrace (DT). 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.
Right now, Genpact is sporting a Zacks Rank of #2 (Buy), while Dynatrace has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that G likely has seen a stronger improvement to its earnings outlook than DT has recently. However, value investors will care about much more than just this.
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.
G currently has a forward P/E ratio of 9.34, while DT has a forward P/E of 22.61. We also note that G has a PEG ratio of 0.99. 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. DT currently has a PEG ratio of 1.59.
Another notable valuation metric for G is its P/B ratio of 2.51. 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, DT has a P/B of 4.07.
These metrics, and several others, help G earn a Value grade of A, while DT has been given a Value grade of D.
G sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that G is the better option right now.
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Genpact Limited (G): Free Stock Analysis Report Dynatrace, Inc. (DT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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