Investors interested in Computer - Services stocks are likely familiar with Perficient (PRFT - Free Report) and CGI Group (GIB - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Perficient and CGI Group are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that PRFT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
PRFT currently has a forward P/E ratio of 17.70, while GIB has a forward P/E of 21.15. We also note that PRFT has a PEG ratio of 1.65. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GIB currently has a PEG ratio of 2.26.
Another notable valuation metric for PRFT is its P/B ratio of 3.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GIB has a P/B of 4.14.
These are just a few of the metrics contributing to PRFT's Value grade of B and GIB's Value grade of C.
PRFT stands above GIB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PRFT is the superior value option right now.