Back to top

Image: Bigstock

EPAM vs. CSGP: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Computers - IT Services sector have probably already heard of Epam (EPAM - Free Report) and CoStar Group (CSGP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Epam is sporting a Zacks Rank of #2 (Buy), while CoStar Group has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that EPAM likely has seen a stronger improvement to its earnings outlook than CSGP has recently. But this is just one piece of the puzzle 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 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.

EPAM currently has a forward P/E ratio of 13.84, while CSGP has a forward P/E of 100.94. We also note that EPAM has a PEG ratio of 1.75. 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. CSGP currently has a PEG ratio of 2.37.

Another notable valuation metric for EPAM is its P/B ratio of 2.36. 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, CSGP has a P/B of 4.25.

Based on these metrics and many more, EPAM holds a Value grade of B, while CSGP has a Value grade of F.

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


EPAM Systems, Inc. (EPAM) - free report >>

CoStar Group, Inc. (CSGP) - free report >>

Published in