Validea's Top Information Technology Stocks Based On Joel Greenblatt

Validea's Earnings Yield Investor model, applying Joel Greenblatt's 'Magic Formula' for high return on capital and earnings yields, rated SCIENCE APPLICATIONS INTERNATIONAL CORP (SAIC) at 90% with a 'PASS' final ranking, signaling strong interest. In contrast, Dell Technologies Inc. (DELL) received an 80% rating but ultimately 'FAILED' the strategy's criteria, as did Western Digital Corp. (WDC) and Fiserv Inc. (FI) with lower scores of 70% and 60% respectively. This positions SAIC as the sole standout among the reviewed IT stocks aligning with this value-driven investment strategy.

Analysis

Based on Validea's implementation of Joel Greenblatt's value investing model, which screens for high earnings yield and return on capital, Science Applications International Corp (SAIC) emerges as a standout within the Information Technology sector. SAIC received a 90% rating and a 'PASS' on the model's final ranking, indicating strong alignment with the strategy's criteria for a mid-cap value stock in the Computer Services industry. In stark contrast, other prominent technology firms failed to meet the model's standards. Dell Technologies (DELL), despite an initial 80% interest score, ultimately received a 'FAIL', as did Western Digital (WDC) and Fiserv (FI) with lower scores of 70% and 60%, respectively. Notably, all four companies, including SAIC, were rated 'NEUTRAL' on the individual metrics of Earnings Yield and Return on Tangible Capital, suggesting that SAIC's superior final ranking is derived from a more nuanced, relative comparison within the model that positions it favorably against its peers.

Key Decisions for Investors

• Investors employing a value-oriented strategy, specifically one modeled on Greenblatt's principles, should prioritize further due diligence on SAIC given its 90% score and exclusive 'PASS' rating in this analysis.
• Caution is warranted for Dell, Western Digital, and Fiserv from a 'Magic Formula' perspective; their 'FAIL' status indicates they do not currently represent attractive value opportunities according to this specific quantitative screen, despite Dell's initial 80% interest score.
• Recognize that this screen is a starting point; the 'NEUTRAL' ratings for key inputs on all companies imply that SAIC's 'PASS' is a measure of relative, rather than absolute, strength, and any investment decision should be corroborated with deeper fundamental analysis.