Investors looking for stocks in the Computers - IT Services sector might want to consider either Amdocs (DOX - Free Report) or Fair Isaac (FICO - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Amdocs and Fair Isaac are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DOX is likely seeing its earnings outlook improve to a greater extent. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DOX currently has a forward P/E ratio of 17.12, while FICO has a forward P/E of 31.23. We also note that DOX has a PEG ratio of 2.19. 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. FICO currently has a PEG ratio of 3.12.
Another notable valuation metric for DOX is its P/B ratio of 2.77. 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, FICO has a P/B of 16.11.
These metrics, and several others, help DOX earn a Value grade of A, while FICO has been given a Value grade of D.
DOX stands above FICO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DOX is the superior value option right now.