Investors interested in stocks from the Computers - IT Services sector have probably already heard of Computer Task Group (CTG) and Epam (EPAM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Computer Task Group has a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CTG is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CTG currently has a forward P/E ratio of 13.37, while EPAM has a forward P/E of 31.66. We also note that CTG has a PEG ratio of 0.67. 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. EPAM currently has a PEG ratio of 1.67.
Another notable valuation metric for CTG is its P/B ratio of 1.27. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EPAM has a P/B of 6.57.
Based on these metrics and many more, CTG holds a Value grade of A, while EPAM has a Value grade of C.
CTG sticks out from EPAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that CTG is the better option right now.
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Computer Task Group, Incorporated (CTG) : Free Stock Analysis Report
EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
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