Back to top

Image: Bigstock

KD vs. VLTO: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors looking for stocks in the Technology Services sector might want to consider either Kyndryl Holdings, Inc. (KD - Free Report) or Veralto (VLTO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Kyndryl Holdings, Inc. and Veralto are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that KD likely has seen a stronger improvement to its earnings outlook than VLTO has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

KD currently has a forward P/E ratio of 20, while VLTO has a forward P/E of 29.35. We also note that KD has a PEG ratio of 4. 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. VLTO currently has a PEG ratio of 4.50.

Another notable valuation metric for KD is its P/B ratio of 5.24. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VLTO has a P/B of 16.42.

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

KD stands above VLTO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KD is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Kyndryl Holdings, Inc. (KD) - free report >>

Veralto Corporation (VLTO) - free report >>

Published in