Investors interested in Consulting Services stocks are likely familiar with CRA International (CRAI) and Accenture (ACN). 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 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.
Right now, CRA International is sporting a Zacks Rank of #2 (Buy), while Accenture has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CRAI has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CRAI currently has a forward P/E ratio of 15.56, while ACN has a forward P/E of 24.53. We also note that CRAI has a PEG ratio of 1.20. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ACN currently has a PEG ratio of 2.37.
Another notable valuation metric for CRAI is its P/B ratio of 1.69. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ACN has a P/B of 9.26.
These are just a few of the metrics contributing to CRAI's Value grade of A and ACN's Value grade of D.
CRAI 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 CRAI is likely the superior value option right now.
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Charles River Associates (CRAI) : Free Stock Analysis Report
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