Investors interested in Consulting Services stocks are likely familiar with Accenture (ACN - Free Report) and Gartner (IT - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Accenture is sporting a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ACN likely has seen a stronger improvement to its earnings outlook than IT has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
ACN currently has a forward P/E ratio of 23.88, while IT has a forward P/E of 38.64. We also note that ACN has a PEG ratio of 2.31. 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 2.73.
Another notable valuation metric for ACN is its P/B ratio of 8.54. 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 16.01.
These metrics, and several others, help ACN earn a Value grade of B, while IT has been given a Value grade of D.
ACN stands above IT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACN is the superior value option right now.