Are Investors Undervaluing DXC Technology (DXC) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is DXC Technology (DXC). DXC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.88, which compares to its industry's average of 19.11. DXC's Forward P/E has been as high as 11.50 and as low as 5.66, with a median of 9.88, all within the past year.
Investors should also note that DXC holds a PEG ratio of 1.04. 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 1.75. Within the past year, DXC's PEG has been as high as 1.54 and as low as 0.90, with a median of 1.09.
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 0.79. This compares to its industry's average P/S of 2.04.
These are just a handful of the figures considered in DXC Technology's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DXC is an impressive value stock right now.
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