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

Zacks Equity Research
·2-min read

Investors with an interest in Computers - IT Services stocks have likely encountered both Amdocs (DOX) and Epam (EPAM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Amdocs is sporting a Zacks Rank of #2 (Buy), while Epam has a Zacks Rank of #3 (Hold). This means that DOX'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.

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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.

DOX currently has a forward P/E ratio of 16.12, while EPAM has a forward P/E of 37.03. We also note that DOX has a PEG ratio of 1.61. 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. EPAM currently has a PEG ratio of 2.15.

Another notable valuation metric for DOX is its P/B ratio of 3.06. 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, EPAM has a P/B of 7.17.

These are just a few of the metrics contributing to DOX's Value grade of B and EPAM's Value grade of D.

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


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Amdocs Limited (DOX) : Free Stock Analysis Report
 
EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
 
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Zacks Investment Research