Investors with an interest in Consulting Services stocks have likely encountered both Huron Consulting (HURN - Free Report) and Gartner (IT - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Currently, Huron Consulting has a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). This means that HURN'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 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.
HURN currently has a forward P/E ratio of 25.76, while IT has a forward P/E of 37.98. We also note that HURN has a PEG ratio of 1.91. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IT currently has a PEG ratio of 2.53.
Another notable valuation metric for HURN is its P/B ratio of 2.29. 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 13.98.
Based on these metrics and many more, HURN holds a Value grade of B, while IT has a Value grade of D.
HURN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HURN is likely the superior value option right now.