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DXC vs. DT: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in Computers - IT Services stocks are likely familiar with DXC Technology Company. (DXC) and Dynatrace (DT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

DXC Technology Company. has a Zacks Rank of #2 (Buy), while Dynatrace has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DXC has an improving earnings outlook. 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.

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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.

DXC currently has a forward P/E ratio of 8.51, while DT has a forward P/E of 99.64. We also note that DXC has a PEG ratio of 0.31. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DT currently has a PEG ratio of 6.28.

Another notable valuation metric for DXC is its P/B ratio of 1.55. 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 15.16.

These metrics, and several others, help DXC earn a Value grade of A, while DT has been given a Value grade of D.

DXC sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that DXC is the better option right now.


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DXC Technology Company. (DXC) : Free Stock Analysis Report
 
Dynatrace, Inc. (DT) : Free Stock Analysis Report
 
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Zacks Investment Research