U.S. Markets open in 6 hrs 55 mins

CACI vs. FORR: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
The Macerich Company (MAC) opens Scottsdale Fashion Square's refurbished luxury wing. The face-lift enables the mall to add an impressive tenant lineup to its roster.

Investors interested in stocks from the Computer - Services sector have probably already heard of CACI International (CACI) and Forrester Research (FORR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, CACI International has a Zacks Rank of #2 (Buy), while Forrester Research has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CACI 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 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.

CACI currently has a forward P/E ratio of 18.53, while FORR has a forward P/E of 29.87. We also note that CACI has a PEG ratio of 1.85. 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. FORR currently has a PEG ratio of 2.49.

Another notable valuation metric for CACI is its P/B ratio of 2.06. 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, FORR has a P/B of 5.21.

These are just a few of the metrics contributing to CACI's Value grade of B and FORR's Value grade of C.

CACI sticks out from FORR in both our Zacks Rank and Style Scores models, so value investors will likely feel that CACI is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CACI International, Inc. (CACI) : Free Stock Analysis Report
 
Forrester Research, Inc. (FORR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.