Investors interested in stocks from the Consulting Services sector have probably already heard of NV5 Holdings (NVEE) and Accenture (ACN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, both NV5 Holdings and Accenture are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
NVEE currently has a forward P/E ratio of 14.12, while ACN has a forward P/E of 27.16. We also note that NVEE has a PEG ratio of 0.71. 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. ACN currently has a PEG ratio of 2.63.
Another notable valuation metric for NVEE is its P/B ratio of 2.34. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ACN has a P/B of 8.66.
These metrics, and several others, help NVEE earn a Value grade of B, while ACN has been given a Value grade of D.
Both NVEE and ACN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NVEE is the superior value option right now.
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