Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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.

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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6 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 6 undervalued stocks in the IT Services & Consulting industry for Tuesday, April 02, 2024. 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.

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 99, which is considered to be undervalued.

When you look at DXC Technology Co’s price-to-sales ratio at 0.29 compared to the industry median at 1.75, this company has a lower price relative to revenue compared to its peers. This could make DXC Technology Co’s stock more attractive for value investors.

Now, let’s assess DXC Technology Co’s EV/EBITDA ratio, also known as enterprise multiple. At 3.6, when compared to the industry median of 14.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. DXC Technology Co’s shareholder yield is higher than its industry median ratio of (1.08%). 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. DXC Technology Co’s price-to-book ratio is lower than its industry median ratio of 2.75. This could make DXC Technology Co more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at DXC Technology Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. DXC Technology Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 23.31. This could make DXC Technology Co more attractive because the lower P/FCF ratio indicates that DXC Technology Co is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Kingsoft Cloud Holdings Ltd (ADR)’s Value Grade

Value Grade:

Kingsoft Cloud Holdings Ltd is a China-based company mainly engaged in independent cloud services. The Company provide a full suite of cloud products combining unified IaaS infrastructure and PaaS middleware, and tailored business applications which support a wide range of use cases that enable customers? diverse business objectives. The Company also offer solutions in a holistic approach, by merging cloud solutions with dedicated customer services. The Company?s end-to-end customer services cover planning, solution development, fulfillment and deployment, as well as ongoing maintenance and upgrade.

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.

Kingsoft Cloud Holdings Ltd (ADR) has a Value Score of 74, which is considered to be undervalued.

Kingsoft Cloud Holdings Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Kingsoft Cloud Holdings Ltd (ADR) less attractive for value investors when compared to the industry median at 2.75.

You can read more about Kingsoft Cloud Holdings Ltd (ADR)’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.

Mawson Infrastructure Group Inc’s Value Grade

Value Grade:

Mawson Infrastructure Group, Inc. is an Australia-based digital infrastructure provider. The Company owns and operates modular data centers (MDCs) in the United States. Its primary business is the ownership and operation of the digital infrastructure associated with the operation of blockchain applications. Application-specific integrated circuit (ASIC) computers known as Miners enable the mining of digital assets such as Bitcoin. It offers hosting or co-location facilities to other businesses in the digital asset infrastructure industry to have their Miners located within its MDCs. It also sells new and used digital currency mining, and MDC equipment. The Company is developing technology to enable it to own and better operate MDCs. It operates a site located in Pennsylvania, United States of America. The Miners operated by the Company are predominately focused on the process of digital mining, specifically for Bitcoin.

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.

Mawson Infrastructure Group Inc has a Value Score of 66, which is considered to be undervalued.

Mawson Infrastructure Group Inc’s price-to-book ratio is higher than its peers. This could make Mawson Infrastructure Group Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about Mawson Infrastructure 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.

Society Pass Inc’s Value Grade

Value Grade:

Society Pass Incorporated is a data-driven, loyalty, fintech and e-commerce ecosystem company. Its segments include Online Grocery and Food and Groceries Deliveries, Digital marketing, Online ticketing and reservation, Telecommunications Reseller, e-Commerce, and Merchant Point of Sale (merchant POS). Online Grocery and Food and Groceries Deliveries segment operate an online food delivery service under the Handycart brand name and an online grocery delivery under the Pushkart brand name. Digital marketing segment operates the digital marketing business with creator and digital marketing platform. Online ticketing and reservation segment operates the sale of domestic and overseas air ticket and hotel reservations. Telecommunications Reseller segment offers sales of local mobile phone plans and Internet data provider plans. e-Commerce operates an online lifestyle platform under the brand name of Leflair. merchant POS segment is involved in the sale of hardware and software to merchants.

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.

Society Pass Inc has a Value Score of 72, which is considered to be undervalued.

Society Pass Inc’s price-to-book ratio is higher than its peers. This could make Society Pass Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about Society Pass 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.

System1 Inc’s Value Grade

Value Grade:

System1, Inc. operates an omnichannel customer acquisition platform, delivering high-intent customers to advertisers. The Company provides its omnichannel customer acquisition platform services through its proprietary responsive acquisition marketing platform (RAMP). The Company’s Owned and Operated Advertising segment is engaged in directly acquiring traffic to its owned and operated websites and utilizing the RAMP platform and related services to connect advertising partners to its owned and operated websites. Its Partner Network segment is engaged in sharing arrangements with network partners for the use of the RAMP platform, and related services provided to them to direct advertising by the advertising partners to their advertising space. RAMP operates across its network of owned and operated websites and related products, allowing it to monetize user traffic that it sources from various acquisition marketing channels, including Google, Facebook, Taboola and Zemanta.

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.

System1 Inc has a Value Score of 97, which is considered to be undervalued.

System1 Inc’s price-to-book ratio is higher than its peers. This could make System1 Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about System1 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.

TTEC Holdings Inc’s Value Grade

Value Grade:

TTEC Holdings, Inc. is a global customer experience (CX) outsourcing partner for marquis and disruptive brands and public sector clients. The Company operates through two business segments: TTEC Digital and TTEC Engage. The TTEC Digital segment is focused on the intersection of Contact Center As a Service (CCaaS), Customer Relationship Management (CRM), and Artificial Intelligence (AI) and Analytics. This segment creates and implements strategic CX transformation roadmaps, sells, operates, and provides managed services for cloud platforms and premise-based CX technologies, including Amazon Web Services, Cisco, Genesys, Google, and Microsoft. The TTEC Engage segment provides the digitally enabled CX operational and managed services to support large, complex enterprise clients’ end-to-end customer interactions at scale. It delivers data-driven omnichannel customer care, customer acquisition, growth, and retention services, tech support, trust and safety and back-office solutions.

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.

TTEC Holdings Inc has a Value Score of 65, which is considered to be undervalued.

TTEC Holdings Inc’s price-earnings ratio is 57.5 compared to the industry median at 27.1. This means that it has a higher price relative to its earnings compared to its peers. This makes TTEC Holdings Inc less attractive for value investors.

TTEC Holdings Inc’s price-to-book ratio is higher than its peers. This could make TTEC Holdings Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about TTEC Holdings 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.

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 6 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.

• DXC Technology Co stock has a Value Grade of A.
• Kingsoft Cloud Holdings Ltd (ADR) stock has a Value Grade of B.
• Mawson Infrastructure Group Inc stock has a Value Grade of B.
• Society Pass Inc stock has a Value Grade of B.
• System1 Inc stock has a Value Grade of A.
• TTEC Holdings Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued IT Services & Consulting Stocks for Tuesday, April 02
• 6 Undervalued IT Services & Consulting Stocks for Monday, April 01
• Why GDS Holdings Ltd - ADR’s (GDS) Stock Is Up 5.11%
• Why Secureworks Corp’s (SCWX) Stock Is Down 8.33%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.