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HCKT vs. IT: Which Stock Is the Better Value Option?

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Investors with an interest in Consulting Services stocks have likely encountered both Hackett Group (HCKT - Free Report) and Gartner (IT - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, both Hackett Group and Gartner are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HCKT currently has a forward P/E ratio of 16.83, while IT has a forward P/E of 45.10. We also note that HCKT has a PEG ratio of 1.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IT currently has a PEG ratio of 3.34.

Another notable valuation metric for HCKT is its P/B ratio of 3.76. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IT has a P/B of 15.22.

Based on these metrics and many more, HCKT holds a Value grade of B, while IT has a Value grade of D.

Both HCKT and IT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HCKT is the superior value option right now.


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