Investors with an interest in Computers - IT Services stocks have likely encountered both 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, TD SYNNEX is sporting a Zacks Rank of #1 (Strong Buy), while Dynatrace has a Zacks Rank of #3 (Hold). 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 piece of the puzzle for value investors.
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 13.00, while DT has a forward P/E of 22.52. We also note that SNX has a PEG ratio of 0.66. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DT currently has a PEG ratio of 1.62.
Another notable valuation metric for SNX is its P/B ratio of 2.19. 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, DT has a P/B of 5.01.
Based on these metrics and many more, SNX holds a Value grade of B, while DT has a Value grade of D.
SNX has seen stronger estimate revision activity and sports more attractive valuation metrics than DT, so it seems like value investors will conclude that SNX is the superior option right now.
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TD SYNNEX Corporation (SNX): Free Stock Analysis Report
Dynatrace, Inc. (DT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).