CTG vs. EPAM: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Computers - IT Services sector have probably already heard of 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Computer Task Group and Epam have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
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.
CTG currently has a forward P/E ratio of 16.78, while EPAM has a forward P/E of 39.73. We also note that CTG has a PEG ratio of 1.12. 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. EPAM currently has a PEG ratio of 1.99.
Another notable valuation metric for CTG is its P/B ratio of 1.34. 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, EPAM has a P/B of 7.83.
These are just a few of the metrics contributing to CTG's Value grade of A and EPAM's Value grade of C.
Both CTG and EPAM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CTG is the superior value option right now.
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Computer Task Group, Incorporated (CTG): Free Stock Analysis Report
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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.