Which stock currently offers the better value?

Investors looking for stocks in the computer and IT services sector should consider either Check Point Software (CHKP) or Dynatrace (DT). But which of these two stocks is more attractive to value investors? To find out, we need to take a closer look at the two.

Everyone has their own methods for finding great value opportunities, but our model combines an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Check Point Software and Dynatrace both currently sport a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that both companies have better earnings prospects. But that’s just one factor that value investors care about.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

The Style Score Value assessment incorporates a number of important fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and numerous other key statistics commonly used by value investors.

CHKP currently has a forward P/E ratio of 16.57, while DT has a forward P/E ratio of 45.27. We also note that CHKP has a PEG ratio of 2.19. This value is similar to the commonly used P/E ratio, where the PEG ratio also takes into account a company’s expected earnings growth rate. DT currently has a PEG ratio of 4.68.

Another important valuation metric for CHKP is its P/B ratio of 5.80. 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. For comparison, DT has a P/B ratio of 8.14.

These and several other metrics help CHKP to earn a B rating, while DT receives a D rating.

The story goes on

Both CHKP and DT are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe CHKP is the better value option right now.

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Check Point Software Technologies Ltd. (CHKP): Free Stock Analysis Report

Dynatrace, Inc. (DT): Free Stock Analysis Report

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