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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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SNX or CTSH: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Business - Software Services sector have probably already heard of Synnex (SNX - Free Report) and Cognizant (CTSH - 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 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, Synnex is sporting a Zacks Rank of #2 (Buy), while Cognizant has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that SNX likely has seen a stronger improvement to its earnings outlook than CTSH has recently. But this is just one piece of the puzzle 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SNX currently has a forward P/E ratio of 8.34, while CTSH has a forward P/E of 16.72. We also note that SNX has a PEG ratio of 0.69. 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. CTSH currently has a PEG ratio of 1.66.
Another notable valuation metric for SNX is its P/B ratio of 1.46. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CTSH has a P/B of 3.34.
Based on these metrics and many more, SNX holds a Value grade of A, while CTSH has a Value grade of C.
SNX stands above CTSH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNX is the superior value option right now.