G or DT: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Computers - IT Services sector have probably already heard of Genpact (G) and Dynatrace (DT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Genpact is sporting a Zacks Rank of #2 (Buy), while Dynatrace 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 G is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

G currently has a forward P/E ratio of 9.97, while DT has a forward P/E of 21.43. We also note that G has a PEG ratio of 1.06. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DT currently has a PEG ratio of 1.51.

Another notable valuation metric for G is its P/B ratio of 2.69. 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, DT has a P/B of 3.94.

These are just a few of the metrics contributing to G's Value grade of A and DT's Value grade of D.

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