AMDOCS LTD (NASDAQ:DOX) – A Potential Undervalued Opportunity in IT Services

AMDOCS LTD (NASDAQ:DOX) was identified by our stock screener as a decent value stock, offering a combination of reasonable valuation, solid profitability, and stable financial health. The company, which provides software and services for communications and media industries, presents an interesting case for value investors. Below, we examine its key fundamentals.

Valuation

DOX stands out with a Valuation Rating of 7/10, indicating it is priced attractively compared to peers. Key highlights:

• P/E ratio of 13.06 – Cheaper than 84% of IT Services industry peers.
• Forward P/E of 11.49 – Below the S&P 500 average (35.19), suggesting room for upside.
• Enterprise Value/EBITDA – More favorable than 76% of competitors.

Profitability

The company earns a Profitability Rating of 7/10, supported by strong margins and returns:

• Operating Margin (16.62%) – Better than 87% of industry peers.
• Return on Invested Capital (13.74%) – Outperforms 84% of competitors.
• Consistent profitability over the past five years.

Financial Health

With a Health Rating of 6/10, DOX maintains a stable balance sheet:

• Low Debt/Equity (0.19) – Better than 63% of peers.
• Altman-Z Score (4.96) – Indicates low bankruptcy risk.
• Debt/FCF (1.07) – Strong solvency, able to repay debt quickly.

Growth

While growth is moderate (Growth Rating of 4/10), there are positive signs:

• EPS Growth (8.36% avg. over 5 years) – Expected to continue at 8.75% annually.
• Revenue growth has slowed, but earnings remain resilient.

Dividend

DOX offers a 2.36% dividend yield, slightly above the S&P 500 average, with a 10-year track record of increasing payouts.

For a deeper look, review the full fundamental analysis of DOX.

Our Decent Value Stock Screener lists more stocks with similar characteristics and is updated regularly.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.