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

Investors interested in stocks from the Computers - IT Services sector have probably already heard of Amdocs (DOX) and ServiceNow (NOW). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Amdocs and ServiceNow are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DOX is likely seeing its earnings outlook improve to a greater extent. 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.

DOX currently has a forward P/E ratio of 14.56, while NOW has a forward P/E of 90.16. We also note that DOX has a PEG ratio of 1.71. 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 3.22.

Another notable valuation metric for DOX is its P/B ratio of 2.49. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NOW has a P/B of 44.84.

These metrics, and several others, help DOX earn a Value grade of A, while NOW has been given a Value grade of F.

DOX stands above NOW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DOX is the superior value option right now.

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Amdocs Limited (DOX) : Free Stock Analysis Report
 
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