Investors looking for stocks in the Business - Software Services sector might want to consider either Synnex (SNX) or Wipro Limited (WIT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Synnex has a Zacks Rank of #2 (Buy), while Wipro Limited has a Zacks Rank of #4 (Sell) right now. This means that SNX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SNX currently has a forward P/E ratio of 8.92, while WIT has a forward P/E of 15.04. We also note that SNX has a PEG ratio of 0.86. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WIT currently has a PEG ratio of 1.40.
Another notable valuation metric for SNX is its P/B ratio of 1.60. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, WIT has a P/B of 2.51.
Based on these metrics and many more, SNX holds a Value grade of A, while WIT has a Value grade of C.
SNX has seen stronger estimate revision activity and sports more attractive valuation metrics than WIT, so it seems like value investors will conclude that SNX is the superior option right now.
SYNNEX Corporation (SNX): Free Stock Analysis Report
Wipro Limited (WIT): Free Stock Analysis Report
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