Back to top

DXC vs. EPAM: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Computers - IT Services sector might want to consider either DXC Technology (DXC - Free Report) or 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.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, DXC Technology is sporting a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DXC has an improving earnings outlook. However, value investors will care about much more than just this.

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.

DXC currently has a forward P/E ratio of 11.82, while EPAM has a forward P/E of 33.53. We also note that DXC has a PEG ratio of 1.63. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EPAM currently has a PEG ratio of 1.71.

Another notable valuation metric for DXC is its P/B ratio of 2.32. 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, EPAM has a P/B of 6.63.

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

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




In-Depth Zacks Research for the Tickers Above


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


DXC Technology Company. (DXC) - free report >>

EPAM Systems, Inc. (EPAM) - free report >>

More from Zacks Tale of the Tape

You May Like