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HCKT vs. IT: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors looking for stocks in the Consulting Services sector might want to consider either Hackett Group (HCKT) or Gartner (IT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Hackett Group is sporting a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HCKT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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 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.

HCKT currently has a forward P/E ratio of 16.62, while IT has a forward P/E of 45.54. We also note that HCKT has a PEG ratio of 1.23. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IT currently has a PEG ratio of 3.37.

Another notable valuation metric for HCKT is its P/B ratio of 3.66. 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, IT has a P/B of 15.37.

These metrics, and several others, help HCKT earn a Value grade of B, while IT has been given a Value grade of C.

HCKT sticks out from IT in both our Zacks Rank and Style Scores models, so value investors will likely feel that HCKT is the better option right now.


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The Hackett Group, Inc. (HCKT) : Free Stock Analysis Report
 
Gartner, Inc. (IT) : Free Stock Analysis Report
 
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Zacks Investment Research