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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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Cognizant and Wipro Limited are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
CTSH currently has a forward P/E ratio of 19.47, while WIT has a forward P/E of 24.81. We also note that CTSH has a PEG ratio of 1.62. 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. WIT currently has a PEG ratio of 2.76.
Another notable valuation metric for CTSH is its P/B ratio of 3.89. 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, WIT has a P/B of 4.55.
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.