Investors with an interest in Consulting Services stocks have likely encountered both CRA International (CRAI) and Gartner (NYSE:IT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Currently, both CRA International and Gartner are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
CRAI currently has a forward P/E ratio of 15.15, while IT has a forward P/E of 37.91. We also note that CRAI has a PEG ratio of 1.17. 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. IT currently has a PEG ratio of 2.81.
Another notable valuation metric for CRAI is its P/B ratio of 1.86. 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, IT has a P/B of 13.47.
These are just a few of the metrics contributing to CRAI's Value grade of B and IT's Value grade of D.
Both CRAI and IT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CRAI is the superior value option right now.
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Charles River Associates (CRAI): Free Stock Analysis Report
Gartner, Inc. (IT): Free Stock Analysis Report
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