Investors interested in stocks from the Consulting Services sector have probably already heard of CRA International (CRAI) and Accenture (ACN). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both CRA International and Accenture have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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.
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.
CRAI currently has a forward P/E ratio of 15.41, while ACN has a forward P/E of 25.51. We also note that CRAI has a PEG ratio of 1.19. 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 2.47.
Another notable valuation metric for CRAI is its P/B ratio of 1.67. 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, ACN has a P/B of 8.88.
These metrics, and several others, help CRAI earn a Value grade of A, while ACN has been given a Value grade of C.
Both CRAI and ACN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CRAI is the superior value option right now.
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Charles River Associates (CRAI) : Free Stock Analysis Report
Accenture PLC (ACN) : Free Stock Analysis Report
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