CDW or NOW: Which Is the Better Value Stock Right Now?
CDW vs. NOW: Which Stock Is the Better Value Option?
Investors looking for stocks in the Computers - IT Services sector might want to consider either CDW (CDW) or ServiceNow (NOW). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, CDW has a Zacks Rank of #2 (Buy), while ServiceNow has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CDW likely has seen a stronger improvement to its earnings outlook than NOW has recently. But this is only part of the picture for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CDW currently has a forward P/E ratio of 25.40, while NOW has a forward P/E of 108.81. We also note that CDW has a PEG ratio of 1.94. 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. NOW currently has a PEG ratio of 3.84.
Another notable valuation metric for CDW is its P/B ratio of 32.25. 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 36.26.
Based on these metrics and many more, CDW holds a Value grade of B, while NOW has a Value grade of D.
CDW stands above NOW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CDW is the superior value option right now.
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CDW Corporation (CDW): Free Stock Analysis Report
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