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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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CTSH vs. WIT: Which Stock Is the Better Value Option?
Investors looking for stocks in the Business - Software Services sector might want to consider either Cognizant (CTSH - Free Report) or Wipro Limited (WIT - Free Report) . 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.
Currently, both Cognizant and Wipro Limited are holding a Zacks Rank of # 2 (Buy). 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 just one piece of the puzzle 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.
CTSH currently has a forward P/E ratio of 18.82, while WIT has a forward P/E of 24.74. We also note that CTSH has a PEG ratio of 1.57. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WIT currently has a PEG ratio of 2.75.
Another notable valuation metric for CTSH is its P/B ratio of 3.76. 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, WIT has a P/B of 4.57.
These are just a few of the metrics contributing to CTSH's Value grade of B and WIT's Value grade of C.
Both CTSH and WIT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CTSH is the superior value option right now.