Investors looking for stocks in the Computers - IT Services sector might want to consider either PERSPECTA INC (PRSP - Free Report) or Epam (EPAM - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both PERSPECTA INC and Epam are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PRSP currently has a forward P/E ratio of 11.54, while EPAM has a forward P/E of 33.89. We also note that PRSP has a PEG ratio of 1.44. 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. EPAM currently has a PEG ratio of 1.73.
Another notable valuation metric for PRSP is its P/B ratio of 1.75. 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, EPAM has a P/B of 7.23.
These metrics, and several others, help PRSP earn a Value grade of A, while EPAM has been given a Value grade of D.
Both PRSP and EPAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PRSP is the superior value option right now.