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Are Investors Undervaluing DXC Technology (DXC) Right Now?


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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

DXC Technology (DXC) is a stock many investors are watching right now. DXC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.45, which compares to its industry's average of 17.45. DXC's Forward P/E has been as high as 12.97 and as low as 5.66, with a median of 10.24, all within the past year.

We also note that DXC holds a PEG ratio of 1.13. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DXC's PEG compares to its industry's average PEG of 1.57. DXC's PEG has been as high as 1.54 and as low as 0.90, with a median of 1.10, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DXC has a P/S ratio of 0.83. This compares to its industry's average P/S of 2.16.

Value investors will likely look at more than just these metrics, but the above data helps show that DXC Technology is likely undervalued currently. And when considering the strength of its earnings outlook, DXC sticks out at as one of the market's strongest value stocks.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: DXC



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