Investors interested in Consulting Services stocks are likely familiar with Information Services Group (III) and Hackett Group (HCKT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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, Information Services Group is sporting a Zacks Rank of #2 (Buy), while Hackett Group has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that III likely has seen a stronger improvement to its earnings outlook than HCKT has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
III currently has a forward P/E ratio of 11.74, while HCKT has a forward P/E of 17.45. We also note that III has a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HCKT currently has a PEG ratio of 1.16.
Another notable valuation metric for III is its P/B ratio of 2.64. 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, HCKT has a P/B of 4.87.
These metrics, and several others, help III earn a Value grade of B, while HCKT has been given a Value grade of C.
III sticks out from HCKT in both our Zacks Rank and Style Scores models, so value investors will likely feel that III is the better option right now.
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