Should Value Investors Buy DXC Technology (DXC) Stock?

DXC

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

DXC Technology (DXC - Free Report) is a stock many investors are watching right now. DXC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

DXC is also sporting a PEG ratio of 0.90. 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. DXC's PEG compares to its industry's average PEG of 1.72. DXC's PEG has been as high as 1.54 and as low as 0.90, with a median of 1.09, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DXC has a P/S ratio of 0.7. This compares to its industry's average P/S of 2.02.

These are only a few of the key metrics included in DXC Technology's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DXC looks like an impressive value stock at the moment.

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