ASGN vs. EPAM: Which Stock Should Value Investors Buy Now?

Investors with an interest in Computers – IT Services stocks have likely encountered both ASGN Inc (ASGN) 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.

Currently, ASGN Inc has a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold). This means that ASGN’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

ASGN currently has a forward P/E ratio of 15.26, while EPAM has a forward P/E of 27.49. We also note that ASGN has a PEG ratio of 1.29. 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 1.40.

Another notable valuation metric for ASGN is its P/B ratio of 3.11. 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, EPAM has a P/B of 5.43.

These metrics, and several others, help ASGN earn a Value grade of B, while EPAM has been given a Value grade of C.

ASGN sticks out from EPAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that ASGN is the better option right now.

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