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 presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Huron Consulting is sporting a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HURN has an improving earnings outlook. But this is only part of the picture for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HURN currently has a forward P/E ratio of 23.27, while IT has a forward P/E of 35.14. We also note that HURN has a PEG ratio of 1.72. 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. IT currently has a PEG ratio of 2.39.
Another notable valuation metric for HURN is its P/B ratio of 2.08. 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, IT has a P/B of 12.40.
Based on these metrics and many more, HURN holds a Value grade of B, while IT has a Value grade of D.
HURN has seen stronger estimate revision activity and sports more attractive valuation metrics than IT, so it seems like value investors will conclude that HURN is the superior option right now.