Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the IT Services & Consulting industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest IT Services & Consulting Stock News

Before choosing which top IT Services & Consulting stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The fundamental outlook for the IT Services and Consulting sub-industry for the next 12 months is positive. Client demand for highly sought after for highly sought-after services such as custom-built integrations are expected to grow strongly in 2022.  Geopolitical impacts from the Russia-Ukraine are expected to be more isolated in nature across the industry. Companies with a significant number of employees in Russia and Ukraine have been hit hard as fears around an inability to deliver consulting, engineering, and integration services remain a key risk. Conversely, for companies with employees spread across several regions, incremental revenue opportunities exist as clients in more impacted areas plan for contingencies if a worst-case scenario occurs. Revenues are expected to increase 18.1% and adjusted earnings per share 20.2% in 2022, driven by increased digital spending as opposed to spending on traditional projects. Headcount utilization and attrition levels will be key areas to watch throughout 2022 as underperformance could be driven by inability to source talent. The S&P 1500 IT Consulting Services Index is down 14.8% through April 1, 2022, compared to 4.6% from the S&P 1500. Much of the underperformance is attributed to outliers with significant exposure to the recent series of geopolitical events. For reference, the sub-industry index rose 35% in 2021, topping the S&P 1500 gain of 26.7% during the same timeframe.

Why Focus on Undervalued IT Services & Consulting Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued IT Services & Consulting Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the IT Services & Consulting industry for Monday, December 18, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the IT Services & Consulting industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Cheer Holding Inc’s Value Grade

Value Grade:

Cheer Holding Inc, formerly Glory Star New Media Group Holdings Ltd, is a China-based company mainly engaged in the provision of next-generation mobile internet infrastructure and platform services. The Company is dedicated to building a digital ecosystem that integrates platforms, applications, technology, and industry into a cohesive system, thereby creating a new, open business environment for web3.0 that leverages artificial intelligence (AI) technology. The Company's portfolio includes a wide range of products and services, such as Polaris Intelligent Cloud, CHEERS Telepathy, CHEERS Open Platform, CHEERS Video, CHEERS e-Mall, CheerReal, CheerCar, CheerChat, CHEERS Fresh Group-Buying E-commerce Platform, Digital Innovation Research Institute, CHEERS Livestreaming, variety show series, IP short video matrix and more.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cheer Holding Inc has a Value Score of 93, which is considered to be undervalued.

When you look at Cheer Holding Inc’s price-to-sales ratio at 0.16 compared to the industry median at 1.63, this company has a lower price relative to revenue compared to its peers. This could make Cheer Holding Inc’s stock more attractive for value investors.

Cheer Holding Inc’s price-earnings ratio is 0.93 compared to the industry median at 25.31. This means it has a lower share price relative to earnings compared to its peers. This could make Cheer Holding Inc more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Cheer Holding Inc’s shareholder yield is lower than its industry median ratio of (1.31%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Cheer Holding Inc’s price-to-book ratio is lower than its industry median ratio of 2.40. This could make Cheer Holding Inc more attractive to investors looking for a new addition to their portfolio.

DXC Technology Co’s Value Grade

Value Grade:

DXC Technology Company is a global information technology (IT) services company. The Company helps global companies run their mission-critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. Its segments include Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment provides technology solutions that help its customers address their business challenges and accelerate transformations adjusted to each customers industry and specific objectives. GBS offerings include analytics and engineering, applications, and insurance software and business process services. The GIS segment provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers. GIS offerings include security, cloud infrastructure and IT outsourcing (ITO), and modern workplaces.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

DXC Technology Co has a Value Score of 97, which is considered to be undervalued.

DXC Technology Co’s price-to-book ratio is higher than its peers. This could make DXC Technology Co less attractive for value investors when compared to the industry median at 2.40.

You can read more about DXC Technology Co’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Information Services Group, Inc.’s Value Grade

Value Grade:

Information Services Group, Inc. is a global technology research and advisory firm. The Company is specialized in digital transformation services, including automation, cloud, and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. It supports both private and public sector organizations to transform and optimize their operational environments. It provides an operating model, ISG NEXT, which offers solutions to businesses such as digital transformation and digital investments. It has two global client solution areas: ISG Digital, which is focused on developing technology, transformation, sourcing, and digital solutions for clients, and ISG Enterprise, which is focused on helping clients manage change and optimize operations in such areas as finance, human resources (HR) and Procure2Pay.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Information Services Group, Inc. has a Value Score of 61, which is considered to be undervalued.

Information Services Group, Inc.’s price-earnings ratio is 17.9 compared to the industry median at 25.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Information Services Group, Inc. more attractive for value investors.

Information Services Group, Inc.’s price-to-book ratio is higher than its peers. This could make Information Services Group, Inc. less attractive for value investors when compared to the industry median at 2.40.

You can read more about Information Services Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

KLDiscovery Inc’s Value Grade

Value Grade:

KLDiscovery, Inc. is a global provider of eDiscovery, information governance and data recovery solutions to corporations, law firms, insurance companies and individuals in 17 countries around the world. It provides a suite of technology offerings, including its end-to-end fully integrated solution, Nebula, which comprehensively addresses information governance, eDiscovery and data recovery needs. With 26 locations across 17 countries, it delivers data management, information governance and eDiscovery solutions to support the litigation, regulatory compliance, and internal investigation needs of clients. It offers data collection and forensic investigation, early case assessment, data processing, application software and data hosting for Web-based document reviews, and managed document review services. In addition, through its global Ontrack data management business, it delivers data recovery, disaster recovery, email extraction and restoration, data destruction, and tape management.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

KLDiscovery Inc has a Value Score of 74, which is considered to be undervalued.

KLDiscovery Inc’s price-to-book ratio is higher than its peers. This could make KLDiscovery Inc less attractive for value investors when compared to the industry median at 2.40.

You can read more about KLDiscovery Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Startek Inc’s Value Grade

Value Grade:

Startek, Inc. is a provider of technology-enabled business process management solutions. It offers omni-channel customer experience (CX), digital transformation, and technology services. Its geographical segments include the Americas, India and Sri Lanka, Malaysia, Australia, South Africa, and the Rest of the World. It offers a range of CX, technology and back-office support solutions. It offers a range of services, such as customer engagement, omnichannel engagement, social media, customer intelligence analytics, work from home, back-office services and Startek Cloud. Its back-office services include finance and accounting services, human resource processing services, data management and spend management services. Its Startek Cloud is a hybrid, omni-cloud platform, which is integrated with artificial intelligence capabilities that enables agents to work in remote and home-based roles. The Company serves various clients, such as insurance, healthcare, travel, and hospitality.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Startek Inc has a Value Score of 79, which is considered to be undervalued.

Startek Inc’s price-to-book ratio is higher than its peers. This could make Startek Inc less attractive for value investors when compared to the industry median at 2.40.

You can read more about Startek Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

2U Inc’s Value Grade

Value Grade:

2U, Inc. is an online education platform company. The Company operates through two segments: the Degree Program segment and the Alternative Credential segment. Its Degree Program segment provides the technology and services to nonprofit colleges and universities to enable the online delivery of degree programs. Its Alternative Credential segment provides premium online open courses, executive education programs, technical, skills-based boot camps and micro-credential programs through relationships with nonprofit colleges and universities and other organizations. Through its platform, the Company provides technology and technology-enabled services. The technology services include learning technology, integrated learning and business systems, and data and analytics support. The technology-enabled services include student engagement services, curriculum and learning services, marketing services, and university and faculty support services.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

2U Inc has a Value Score of 70, which is considered to be undervalued.

2U Inc’s price-to-book ratio is higher than its peers. This could make 2U Inc less attractive for value investors when compared to the industry median at 2.40.

You can read more about 2U Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Unisys Corp’s Value Grade

Value Grade:

Unisys Corporation is a global technology solutions company. The Company operates through three segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I;), and Enterprise Computing Solutions (ECS). The DWS segment provides modern and traditional workplace solutions. The CA&I; segment provides digital platforms, applications, and infrastructure solutions. The ECS segment provides solutions that harness secure, continuous high-intensity computing and enable digital services through software-defined operating environments. It has developed a portfolio of platforms, enterprise software and technology products that support the delivery of its primary solutions. Its products include Unisys InteliServe, PowerSuite, CloudForte, ClearPath Forward, and Unisys Stealth. Unisys InteliServe offers a suite of technologies for omnichannel support, advanced analytics, automation, artificial intelligence, and machine learning and identity authentication.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Unisys Corp has a Value Score of 96, which is considered to be undervalued.

You can read more about Unisys Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other IT Services & Consulting Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about IT Services & Consulting stocks as well as other industrys.

Choosing Which of the 7 Best IT Services & Consulting Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Cheer Holding Inc stock has a Value Grade of A.
• DXC Technology Co stock has a Value Grade of A.
• Information Services Group, Inc. stock has a Value Grade of B.
• KLDiscovery Inc stock has a Value Grade of B.
• Startek Inc stock has a Value Grade of B.
• 2U Inc stock has a Value Grade of B.
• Unisys Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the IT Services & Consulting industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About IT Services & Consulting Stocks

Want to learn more about IT Services & Consulting stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued IT Services & Consulting Stocks for Monday, December 18
• What You Need to Know About Accenture Plc's Q4 Earnings
• What You Need to Know About Akamai Technologies, Inc.'s Q3 Earnings
• What You Need to Know About Alkami Technology Inc's Q3 Earnings

AAII Disclaimer

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