Investors interested in stocks from the Computers - IT Services sector have probably already heard of Amdocs (DOX) and Roper Technologies (ROP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Amdocs has a Zacks Rank of #2 (Buy), while Roper Technologies has a Zacks Rank of #3 (Hold). This means that DOX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DOX currently has a forward P/E ratio of 7.51, while ROP has a forward P/E of 17.66. We also note that DOX has a PEG ratio of 0.86. 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. ROP currently has a PEG ratio of 1.77.
Another notable valuation metric for DOX is its P/B ratio of 1.76. 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, ROP has a P/B of 2.12.
Based on these metrics and many more, DOX holds a Value grade of A, while ROP has a Value grade of C.
DOX stands above ROP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DOX is the superior value option right now.
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Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
