CTG vs. EPAM: Which Stock Is the Better Value Option?

Investors interested in Computers - IT Services stocks are likely familiar with Computer Task Group (CTG) and Epam (EPAM). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Computer Task Group has a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CTG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CTG currently has a forward P/E ratio of 12.51, while EPAM has a forward P/E of 33.37. We also note that CTG has a PEG ratio of 0.63. 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 1.69.

Another notable valuation metric for CTG is its P/B ratio of 1.19. 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, EPAM has a P/B of 7.27.

These are just a few of the metrics contributing to CTG's Value grade of A and EPAM's Value grade of D.

CTG stands above EPAM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CTG is the superior value option right now.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.