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

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Investors interested in Computers - IT Services stocks are likely familiar with Genpact (G - Free Report) and Dynatrace (DT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Genpact is sporting a Zacks Rank of #2 (Buy), while Dynatrace has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that G is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

G currently has a forward P/E ratio of 13.21, while DT has a forward P/E of 27.06. We also note that G has a PEG ratio of 1.37. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DT currently has a PEG ratio of 1.91.

Another notable valuation metric for G is its P/B ratio of 3.27. 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, DT has a P/B of 4.79.

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

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


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