Investors interested in Computers - IT Services stocks are likely familiar with Dell Technologies (NYSE:DELL) and Medallia (NYSE:MDLA). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Dell Technologies is sporting a Zacks Rank of #2 (Buy), while Medallia 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 DELL has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
DELL currently has a forward P/E ratio of 9.25, while MDLA has a forward P/E of 2,332.67. We also note that DELL has a PEG ratio of 0.77. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MDLA currently has a PEG ratio of 58.32.
Another notable valuation metric for DELL is its P/B ratio of 11.28. 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, MDLA has a P/B of 11.32.
Based on these metrics and many more, DELL holds a Value grade of A, while MDLA has a Value grade of F.
DELL sticks out from MDLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that DELL is the better option right now.
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Dell Technologies Inc. (DELL): Free Stock Analysis Report
Medallia, Inc. (MDLA): Free Stock Analysis Report
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