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III vs. NVEE: Which Stock Is the Better Value Option?

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Investors interested in Consulting Services stocks are likely familiar with Information Services Group (III - Free Report) and NV5 Holdings (NVEE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Information Services Group has a Zacks Rank of #2 (Buy), while NV5 Holdings has a Zacks Rank of #3 (Hold) right now. This means that III's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

III currently has a forward P/E ratio of 10.40, while NVEE has a forward P/E of 17.26. We also note that III has a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NVEE currently has a PEG ratio of 0.80.

Another notable valuation metric for III is its P/B ratio of 2.43. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NVEE has a P/B of 2.82.

These metrics, and several others, help III earn a Value grade of A, while NVEE has been given a Value grade of C.

III has seen stronger estimate revision activity and sports more attractive valuation metrics than NVEE, so it seems like value investors will conclude that III is the superior option right now.


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