Investors interested in stocks from the Computers - IT Services sector have probably already heard of ASGN Inc (ASGN) and Dynatrace, Inc. (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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, ASGN Inc has a Zacks Rank of #2 (Buy), while Dynatrace, Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ASGN has an improving earnings outlook. 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.
ASGN currently has a forward P/E ratio of 18.18, while DT has a forward P/E of 76.09. We also note that ASGN has a PEG ratio of 2.34. 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 2.39.
Another notable valuation metric for ASGN is its P/B ratio of 3.13. 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 11.72.
Based on these metrics and many more, ASGN holds a Value grade of B, while DT has a Value grade of F.
ASGN has seen stronger estimate revision activity and sports more attractive valuation metrics than DT, so it seems like value investors will conclude that ASGN is the superior option right now.
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