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DOX vs. DT: Which Stock Should Value Investors Buy Now?

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Investors interested in Computers - IT Services stocks are likely familiar with Amdocs (DOX - Free Report) and Dynatrace (DT - Free Report) . 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Amdocs has a Zacks Rank of #2 (Buy), while Dynatrace 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 DOX has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

DOX currently has a forward P/E ratio of 13.75, while DT has a forward P/E of 41.65. We also note that DOX has a PEG ratio of 1.20. 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. DT currently has a PEG ratio of 2.14.

Another notable valuation metric for DOX is its P/B ratio of 2.99. 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, DT has a P/B of 6.66.

These are just a few of the metrics contributing to DOX's Value grade of B and DT's Value grade of D.

DOX sticks out from DT in both our Zacks Rank and Style Scores models, so value investors will likely feel that DOX is the better option right now.


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