Yahoo Finance CRAI vs. IT: Which Stock Is the Better Value Option?
Investors with an interest in Consulting Services stocks have likely encountered both CRA International (CRAI) and Gartner (IT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, CRA International has a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold). This means that CRAI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.
CRAI currently has a forward P/E ratio of 29.18, while IT has a forward P/E of 37.07. We also note that CRAI has a PEG ratio of 1.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IT currently has a PEG ratio of 3.75.
Another notable valuation metric for CRAI is its P/B ratio of 5.90. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IT has a P/B of 46.28.
These are just a few of the metrics contributing to CRAI's Value grade of B and IT's Value grade of D.
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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Charles River Associates (CRAI) : Free Stock Analysis Report
Gartner, Inc. (IT) : Free Stock Analysis Report
