Investors interested in stocks from the Computers - IT Services sector have probably already heard of Computer Task Group (CTG) and CoStar Group (CSGP). But which of these two stocks presents investors with the better value opportunity right now? 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.
Currently, Computer Task Group has a Zacks Rank of #1 (Strong Buy), while CoStar Group has a Zacks Rank of #3 (Hold). 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 only part of the picture for value investors.
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.
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.
CTG currently has a forward P/E ratio of 13.49, while CSGP has a forward P/E of 62.43. We also note that CTG has a PEG ratio of 0.90. 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. CSGP currently has a PEG ratio of 4.16.
Another notable valuation metric for CTG is its P/B ratio of 1. 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, CSGP has a P/B of 7.33.
Based on these metrics and many more, CTG holds a Value grade of A, while CSGP has a Value grade of F.
CTG sticks out from CSGP 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
CoStar Group, Inc. (CSGP) : Free Stock Analysis Report
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