Investors looking for stocks in the Consulting Services sector might want to consider either Information Services Group (III) or NV5 Holdings (NVEE). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Currently, Information Services Group has a Zacks Rank of #1 (Strong Buy), while NV5 Holdings 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 III has an improving earnings outlook. But this is only part of the picture 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.
III currently has a forward P/E ratio of 9.76, while NVEE has a forward P/E of 22.69. We also note that III has a PEG ratio of 0.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NVEE currently has a PEG ratio of 1.05.
Another notable valuation metric for III is its P/B ratio of 2.42. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NVEE has a P/B of 3.08.
These are just a few of the metrics contributing to III's Value grade of B and NVEE's Value grade of C.
III has seen stronger estimate revision activity and sports more attractive valuation metrics than NVEE, so it seems like value investors will conclude that III is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Information Services Group, Inc. (III): Free Stock Analysis Report NV5 Global, Inc. (NVEE): Free Stock Analysis Report To read this article on Zacks.com click here.