Investors with an interest in Consulting Services stocks have likely encountered both Information Services Group (III) and Equifax (EFX). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, Information Services Group has a Zacks Rank of #2 (Buy), while Equifax 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 III is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
III currently has a forward P/E ratio of 18.39, while EFX has a forward P/E of 31.52. We also note that III has a PEG ratio of 1.02. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EFX currently has a PEG ratio of 2.78.
Another notable valuation metric for III is its P/B ratio of 2.87. 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, EFX has a P/B of 5.75.
These metrics, and several others, help III earn a Value grade of B, while EFX has been given a Value grade of D.
III has seen stronger estimate revision activity and sports more attractive valuation metrics than EFX, so it seems like value investors will conclude that III is the superior option right now.
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Information Services Group, Inc. (III): Free Stock Analysis Report Equifax, Inc. (EFX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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