GIB vs. FORR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Computer - Services sector have probably already heard of CGI Group (GIB) and Forrester Research (FORR). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
CGI Group and Forrester Research are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GIB likely has seen a stronger improvement to its earnings outlook than FORR has recently. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GIB currently has a forward P/E ratio of 21.59, while FORR has a forward P/E of 28.68. We also note that GIB has a PEG ratio of 2.31. 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. FORR currently has a PEG ratio of 2.39.
Another notable valuation metric for GIB is its P/B ratio of 4.01. 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, FORR has a P/B of 5.90.
These are just a few of the metrics contributing to GIB's Value grade of B and FORR's Value grade of D.
GIB sticks out from FORR in both our Zacks Rank and Style Scores models, so value investors will likely feel that GIB is the better option right now.
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