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CTG vs. DT: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Computers - IT Services sector might want to consider either Computer Task Group (CTG) or 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Computer Task Group has a Zacks Rank of #2 (Buy), while Dynatrace 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 CTG has an improving earnings 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.

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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.

CTG currently has a forward P/E ratio of 17.17, while DT has a forward P/E of 94.14. We also note that CTG has a PEG ratio of 0.86. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DT currently has a PEG ratio of 5.93.

Another notable valuation metric for CTG is its P/B ratio of 1.73. 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 14.29.

These are just a few of the metrics contributing to CTG's Value grade of A and DT's Value grade of D.

CTG has seen stronger estimate revision activity and sports more attractive valuation metrics than DT, so it seems like value investors will conclude that CTG is the superior option right now.


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Computer Task Group, Incorporated (CTG) : Free Stock Analysis Report
 
Dynatrace, Inc. (DT) : Free Stock Analysis Report
 
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Zacks Investment Research