WIT vs. TYL: Which Stock Is the Better Value Option?
Investors looking for stocks in the Business - Software Services sector might want to consider either Wipro Limited (WIT) or Tyler Technologies (TYL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Wipro Limited is sporting a Zacks Rank of #2 (Buy), while Tyler Technologies has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WIT has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
WIT currently has a forward P/E ratio of 17.32, while TYL has a forward P/E of 68.79. We also note that WIT has a PEG ratio of 1.92. 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. TYL currently has a PEG ratio of 4.59.
Another notable valuation metric for WIT is its P/B ratio of 2.92. 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, TYL has a P/B of 8.26.
These metrics, and several others, help WIT earn a Value grade of B, while TYL has been given a Value grade of D.
WIT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WIT is likely the superior value option right now.
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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.