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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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Cognizant Technology Solutions Corporation (CTSH) - free report >>
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CTSH or WIT: Which Is the Better Value Stock Right Now?
Investors with an interest in Business - Software Services stocks have likely encountered both Cognizant (CTSH - Free Report) and Wipro Limited (WIT - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Cognizant has a Zacks Rank of #2 (Buy), while Wipro Limited has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CTSH likely has seen a stronger improvement to its earnings outlook than WIT has recently. But this is only part of the picture for value investors.
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.
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.
CTSH currently has a forward P/E ratio of 16.14, while WIT has a forward P/E of 22.77. We also note that CTSH has a PEG ratio of 2.22. 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. WIT currently has a PEG ratio of 4.19.
Another notable valuation metric for CTSH is its P/B ratio of 2.74. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WIT has a P/B of 3.53.
Based on these metrics and many more, CTSH holds a Value grade of B, while WIT has a Value grade of C.
CTSH stands above WIT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CTSH is the superior value option right now.