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

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.

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.

DXC Technology Company. and Dynatrace are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DXC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DXC currently has a forward P/E ratio of 9.64, while DT has a forward P/E of 120.95. We also note that DXC has a PEG ratio of 0.35. 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 15.59.

Another notable valuation metric for DXC is its P/B ratio of 1.65. 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 18.74.

Based on these metrics and many more, DXC holds a Value grade of A, while DT has 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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