Investors interested in Consulting Services stocks are likely familiar with CRA International (CRAI) and Gartner (IT). 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, CRA International is sporting a Zacks Rank of #1 (Strong Buy), while Gartner has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CRAI is likely seeing its earnings outlook improve to a greater extent. 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.
CRAI currently has a forward P/E ratio of 13.54, while IT has a forward P/E of 39.18. We also note that CRAI has a PEG ratio of 1.04. 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. IT currently has a PEG ratio of 3.92.
Another notable valuation metric for CRAI is its P/B ratio of 1.46. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, IT has a P/B of 11.29.
Based on these metrics and many more, CRAI holds a Value grade of A, while IT has a Value grade of C.
CRAI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CRAI is likely the superior value option right now.
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