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DXC vs. EPAM: Which Stock Should Value Investors Buy Now?

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Investors interested in Computers - IT Services stocks are likely familiar with DXC Technology Company. (DXC - Free Report) and Epam (EPAM - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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 Epam 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 8.91, while EPAM has a forward P/E of 79.38. We also note that DXC has a PEG ratio of 0.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EPAM currently has a PEG ratio of 2.84.

Another notable valuation metric for DXC is its P/B ratio of 1.63. 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, EPAM has a P/B of 16.90.

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

Both DXC and EPAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DXC is the superior value option right now.


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