Investors interested in stocks from the Computers - IT Services sector have probably already heard of TD SYNNEX (SNX) and Dynatrace (DT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, TD SYNNEX has a Zacks Rank of #1 (Strong Buy), while Dynatrace has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SNX has an improving earnings outlook. But this is just one piece of the puzzle 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 14.57, while DT has a forward P/E of 21.08. We also note that SNX has a PEG ratio of 1.00. 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. DT currently has a PEG ratio of 1.52.
Another notable valuation metric for SNX is its P/B ratio of 2.2. 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, DT has a P/B of 4.64.
These metrics, and several others, help SNX earn a Value grade of B, while DT has been given a Value grade of D.
SNX stands above DT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNX is the superior value option right now.
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TD SYNNEX Corporation (SNX): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).