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

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Investors interested in Computers - IT Services stocks are likely familiar with Vertiv Holdings Co. (VRT - Free Report) and Dynatrace (DT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Vertiv Holdings Co. and Dynatrace are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VRT has an improving earnings outlook. 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.

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.

VRT currently has a forward P/E ratio of 12.23, while DT has a forward P/E of 42.08. We also note that VRT has a PEG ratio of 0.30. 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. DT currently has a PEG ratio of 2.09.

Another notable valuation metric for VRT is its P/B ratio of 3.63. 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 8.14.

These are just a few of the metrics contributing to VRT's Value grade of B and DT's Value grade of F.

VRT sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that VRT is the better option right now.


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Dynatrace, Inc. (DT) - free report >>

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