Investors looking for stocks in the Computers - IT Services sector might want to consider either SAIC (SAIC) or Wix.com (WIX). 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both SAIC and Wix.com are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
SAIC currently has a forward P/E ratio of 15.23, while WIX has a forward P/E of 119.21. We also note that SAIC has a PEG ratio of 2.77. 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. WIX currently has a PEG ratio of 4.54.
Another notable valuation metric for SAIC is its P/B ratio of 3.91. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WIX has a P/B of 36.58.
These metrics, and several others, help SAIC earn a Value grade of B, while WIX has been given a Value grade of F.
Both SAIC and WIX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SAIC is the superior value option right now.