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 is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Huron Consulting and Gartner are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that HURN likely has seen a stronger improvement to its earnings outlook than IT has recently. However, value investors will care about much more than just this.
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 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.
HURN currently has a forward P/E ratio of 17.32, while IT has a forward P/E of 27.18. We also note that HURN has a PEG ratio of 1.28. 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. IT currently has a PEG ratio of 2.55.
Another notable valuation metric for HURN is its P/B ratio of 1.97. 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, IT has a P/B of 10.10.
These metrics, and several others, help HURN earn a Value grade of B, while IT has been given a Value grade of D.
HURN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HURN is likely the superior value option right now.