CRAI vs. IT: Which Stock Is the Better Value Option?
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Investors with an interest in Consulting Services stocks have likely encountered both CRA International (CRAI) and Gartner (IT). But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both CRA International and Gartner have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CRAI currently has a forward P/E ratio of 26.80, while IT has a forward P/E of 43.25. We also note that CRAI has a PEG ratio of 1.67. 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. IT currently has a PEG ratio of 3.13.
Another notable valuation metric for CRAI is its P/B ratio of 6.17. 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 60.02.
These metrics, and several others, help CRAI earn a Value grade of B, while IT has been given a Value grade of D.
Both CRAI and IT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CRAI is 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