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

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Investors with an interest in Computers - IT Services stocks have likely encountered both Vertiv Holdings Co. (VRT - Free Report) and Dynatrace (DT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Vertiv Holdings Co. is sporting 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 VRT has an improving earnings 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.

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.

VRT currently has a forward P/E ratio of 10.97, while DT has a forward P/E of 43.06. We also note that VRT has a PEG ratio of 0.28. 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. DT currently has a PEG ratio of 2.13.

Another notable valuation metric for VRT is its P/B ratio of 3.25. 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 8.33.

Based on these metrics and many more, VRT holds a Value grade of A, while DT has a Value grade of D.

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


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Dynatrace, Inc. (DT) - free report >>

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