Investors with an interest in Computers - IT Services stocks have likely encountered both Amdocs (DOX - Free Report) and 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Amdocs and Epam have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
DOX currently has a forward P/E ratio of 14.26, while EPAM has a forward P/E of 34.02. We also note that DOX has a PEG ratio of 1.68. 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 1.70.
Another notable valuation metric for DOX is its P/B ratio of 2.57. 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 6.91.
These are just a few of the metrics contributing to DOX's Value grade of B and EPAM's Value grade of D.
Both DOX and EPAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DOX is the superior value option right now.