Investors interested in Computers - IT Services stocks are likely familiar with Computer Task Group (CTG) and Infosys (INFY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Computer Task Group and Infosys are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.
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.
CTG currently has a forward P/E ratio of 10.89, while INFY has a forward P/E of 25.92. We also note that CTG has a PEG ratio of 0.68. 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. INFY currently has a PEG ratio of 2.59.
Another notable valuation metric for CTG is its P/B ratio of 1.19. 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, INFY has a P/B of 6.72.
Based on these metrics and many more, CTG holds a Value grade of A, while INFY has a Value grade of C.
Both CTG and INFY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CTG is the superior value option right now.
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Computer Task Group, Incorporated (CTG) : Free Stock Analysis Report
Infosys Limited (INFY) : Free Stock Analysis Report
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