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GIB vs. PRFT: Which Stock Is the Better Value Option?

GIB vs. PRFT: Which Stock Is the Better Value Option?

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This story originally appeared on Zacks

Investors interested in stocks from the Computer - Services sector have probably already heard of CGI Group (GIB) and Perficient (PRFT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

- Zacks

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both CGI Group and Perficient are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.

GIB currently has a forward P/E ratio of 18.05, while PRFT has a forward P/E of 41.03. We also note that GIB has a PEG ratio of 2.20. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PRFT currently has a PEG ratio of 2.28.

Another notable valuation metric for GIB is its P/B ratio of 3.79. 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, PRFT has a P/B of 10.85.

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

Both GIB and PRFT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GIB is the superior value option right now.



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CGI Group, Inc. (GIB): Free Stock Analysis Report

 

Perficient, Inc. (PRFT): Free Stock Analysis Report

 

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