Investors looking for stocks in the Consulting Services sector might want to consider either Information Services Group (III) or 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 piece of the puzzle for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
III currently has a forward P/E ratio of 17.03, while EFX has a forward P/E of 35.65. We also note that III has a PEG ratio of 1.06. 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. EFX currently has a PEG ratio of 2.69.
Another notable valuation metric for III is its P/B ratio of 2.36. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EFX has a P/B of 6.70.
Based on these metrics and many more, III holds a Value grade of A, while EFX has a Value grade of D.
III 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 III is likely the superior value 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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