Investors interested in stocks from the Computers - IT Services sector have probably already heard of Amdocs (DOX) and Epam (EPAM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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 Amdocs and Epam have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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 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.
DOX currently has a forward P/E ratio of 14.90, while EPAM has a forward P/E of 36.53. We also note that DOX has a PEG ratio of 1.75. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EPAM currently has a PEG ratio of 1.85.
Another notable valuation metric for DOX is its P/B ratio of 2.54. 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, EPAM has a P/B of 7.42.
These are just a few of the metrics contributing to DOX's Value grade of B and EPAM's Value grade of D.
Both DOX and EPAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DOX is the superior value option right now.
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Amdocs Limited (DOX) : Free Stock Analysis Report
EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
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