SNX or NOW: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Computers - IT Services sector have probably already heard of TD SYNNEX (SNX) and ServiceNow (NOW). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, TD SYNNEX has a Zacks Rank of #1 (Strong Buy), while ServiceNow has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SNX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
SNX currently has a forward P/E ratio of 13.58, while NOW has a forward P/E of 33.97. We also note that SNX has a PEG ratio of 0.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NOW currently has a PEG ratio of 1.39.
Another notable valuation metric for SNX is its P/B ratio of 2.39. 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, NOW has a P/B of 11.4.
Based on these metrics and many more, SNX holds a Value grade of B, while NOW has a Value grade of F.
SNX stands above NOW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNX is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
