Investors interested in stocks from the Consulting Services sector have probably already heard of Huron Consulting (HURN) and Franklin Covey (FC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Huron Consulting and Franklin Covey are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HURN has an improving earnings outlook. 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.
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.
HURN currently has a forward P/E ratio of 24.19, while FC has a forward P/E of 86.07. We also note that HURN has a PEG ratio of 1.79. 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. FC currently has a PEG ratio of 5.30.
Another notable valuation metric for HURN is its P/B ratio of 2.44. 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, FC has a P/B of 7.05.
These metrics, and several others, help HURN earn a Value grade of B, while FC has been given a Value grade of D.
HURN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HURN is likely the superior value option right now.
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Huron Consulting Group Inc. (HURN) : Free Stock Analysis Report
Franklin Covey Company (FC) : Free Stock Analysis Report
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