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 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
TD SYNNEX and Dynatrace are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SNX is likely seeing its earnings outlook improve to a greater extent. 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.
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.
SNX currently has a forward P/E ratio of 14.52, while DT has a forward P/E of 21.26. We also note that SNX has a PEG ratio of 0.99. 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 1.38.
Another notable valuation metric for SNX is its P/B ratio of 2.19. 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, DT has a P/B of 4.46.
Based on these metrics and many more, SNX holds a Value grade of A, while DT has 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).