Investors interested in Computers - IT Services stocks are likely familiar with TD SYNNEX (SNX) and Dynatrace (DT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 has a Zacks Rank of #1 (Strong Buy), while Dynatrace has a Zacks Rank of #3 (Hold) 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 only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 13.48, while DT has a forward P/E of 25.20. We also note that SNX has a PEG ratio of 0.68. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DT currently has a PEG ratio of 1.71.
Another notable valuation metric for SNX is its P/B ratio of 2.27. 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 5.88.
These metrics, and several others, help SNX earn a Value grade of B, while DT has been given a Value grade of D.
SNX sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that SNX is the better 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).