Investors interested in stocks from the Computer - Services sector have probably already heard of CACI International (CACI) and CGI Group (GIB). 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.
Currently, both CACI International and CGI Group are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CACI currently has a forward P/E ratio of 17.57, while GIB has a forward P/E of 19. We also note that CACI has a PEG ratio of 1.76. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GIB currently has a PEG ratio of 2.11.
Another notable valuation metric for CACI is its P/B ratio of 2.01. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GIB has a P/B of 3.58.
These are just a few of the metrics contributing to CACI's Value grade of A and GIB's Value grade of C.
Both CACI and GIB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CACI is the superior value option right now.
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CACI International, Inc. (CACI) : Free Stock Analysis Report
CGI Group, Inc. (GIB) : Free Stock Analysis Report
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