Should Value Investors Buy Amdocs (DOX) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Amdocs (DOX) is a stock many investors are watching right now. DOX is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.05. This compares to its industry's average Forward P/E of 26.31. Over the last 12 months, DOX's Forward P/E has been as high as 13.67 and as low as 11.05, with a median of 12.19.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DOX has a P/S ratio of 2.04. This compares to its industry's average P/S of 2.2.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Amdocs is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DOX feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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