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VRTU or FORR: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Computer - Services sector might want to consider either Virtusa or Forrester Research (FORR - 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.

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.

Currently, Virtusa has a Zacks Rank of #2 (Buy), while Forrester Research has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VRTU likely has seen a stronger improvement to its earnings outlook than FORR has recently. However, value investors will care about much more than just this.

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.

VRTU currently has a forward P/E ratio of 17.13, while FORR has a forward P/E of 30.44. We also note that VRTU has a PEG ratio of 1.22. 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. FORR currently has a PEG ratio of 2.54.

Another notable valuation metric for VRTU is its P/B ratio of 2.21. 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, FORR has a P/B of 3.72.

These metrics, and several others, help VRTU earn a Value grade of B, while FORR has been given a Value grade of C.

VRTU 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 VRTU is likely the superior value option right now.


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