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CRAI or IT: Which Is the Better Value Stock Right Now?

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Investors interested in Consulting Services stocks are likely familiar with CRA International (CRAI - Free Report) and Gartner (IT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, CRA International is sporting a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CRAI likely has seen a stronger improvement to its earnings outlook than IT has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

CRAI currently has a forward P/E ratio of 24.18, while IT has a forward P/E of 40.33. We also note that CRAI has a PEG ratio of 1.51. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IT currently has a PEG ratio of 4.18.

Another notable valuation metric for CRAI is its P/B ratio of 4.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, IT has a P/B of 52.73.

These are just a few of the metrics contributing to CRAI's Value grade of A and IT's Value grade of D.

CRAI stands above IT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CRAI is the superior value option right now.


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