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 Thursday, June 27, 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.

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 72, which is considered to be undervalued.

When you look at Kingsoft Cloud Holdings Ltd (ADR)’s price-to-sales ratio at 0.67 compared to the industry median at 1.64, this company has a lower price relative to revenue compared to its peers. This could make Kingsoft Cloud Holdings Ltd (ADR)’s stock 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. Kingsoft Cloud Holdings Ltd (ADR)’s shareholder yield is lower than its industry median ratio of (1.45%). 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. Kingsoft Cloud Holdings Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 2.50. This could make Kingsoft Cloud Holdings Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

NetSol Technologies Inc.’s Value Grade

Value Grade:

NetSol Technologies, Inc. is a provider of information technology (IT) and enterprise software solutions primarily serving the global leasing and finance industry. The Company is engaged in licensing, subscriptions, modification, enhancement and support of its suite of financial applications, under the brand name NFS Ascent to businesses in the global finance and leasing space. The Company operates through three segments: North America, Europe and Asia-Pacific. Its NFS Ascent is built on cutting-edge, modern technology that enables auto, equipment and big-ticket finance companies, alongside banks, to run their retail and wholesale finance business with ease. NFS Ascent Constituent Applications include Omni Point of Sale (Omni POS), Contract Management System (CMS), Wholesale Finance System (WFS), Dealer Auditor Access System (DAAS), NFS Ascent deployed on the cloud and NFS Digital. It also offers Otoz Digital Auto Retail and Mobility Orchestration, Otoz Ecosystem and AppexNow.

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.

NetSol Technologies Inc. has a Value Score of 61, which is considered to be undervalued.

NetSol Technologies Inc.’s price-to-book ratio is higher than its peers. This could make NetSol Technologies Inc. less attractive for value investors when compared to the industry median at 2.50.

You can read more about NetSol Technologies 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 99, 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 2.50.

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.

TSR Inc’s Value Grade

Value Grade:

TSR, Inc. is a staffing company, which is focused on recruiting Information Technology (IT) professionals for short- and long-term assignments, permanent placements, project work and providing contract computer programming services to its customers. The Company provides its customers with technical computer personnel to supplement their in-house IT capabilities. Its contract computer programming services involve the provision of technical staff to customers to meet the specialized requirements of their IT operations. The Company has staffing capabilities in the areas of application development in .net and java, mobile applications for Android and IOS platforms, project management, IT security specialists, cloud development and architecture, business analysts, UI design and development, network infrastructure and support and database development and administration. The Company also provides contract administrative (non-IT) workers to support IT customers.

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.

TSR Inc has a Value Score of 76, which is considered to be undervalued.

TSR Inc’s price-earnings ratio is 15.6 compared to the industry median at 25.2. This means that it has a lower price relative to its earnings compared to its peers. This makes TSR Inc more attractive for value investors.

TSR Inc’s price-to-book ratio is higher than its peers. This could make TSR Inc less attractive for value investors when compared to the industry median at 2.50.

You can read more about TSR 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 97, which is considered to be undervalued.

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 2.50.

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.

VNET Group Inc - ADR’s Value Grade

Value Grade:

VNET Group Inc, formerly 21Vianet Group Inc, is a carrier-neutral Internet data center services provider. The Company hosts its customers' servers and networking equipment and provides interconnectivity. The Company also provides managed network services to enable customers to deliver data across the Internet through its data transmission network and smart routing technology. The Company provides value-added services, such as content delivery network services, virtual private network services and last-mile wired broadband services. It offers public cloud services, private cloud and hybrid services. The Company also offers container-based data center service. The Company's service offerings include hosting and related services, and managed network services. The Company provides hosting and related services to house servers and networking equipment in its data centers and connects them through its data transmission network, and offers other hosting related value-added 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.

VNET Group Inc - ADR has a Value Score of 62, which is considered to be undervalued.

VNET Group Inc - ADR’s price-to-book ratio is higher than its peers. This could make VNET Group Inc - ADR less attractive for value investors when compared to the industry median at 2.50.

You can read more about VNET Group Inc - 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.

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.

• Kingsoft Cloud Holdings Ltd (ADR) stock has a Value Grade of B.
• NetSol Technologies Inc. stock has a Value Grade of B.
• System1 Inc stock has a Value Grade of A.
• TSR Inc stock has a Value Grade of B.
• TTEC Holdings Inc stock has a Value Grade of A.
• VNET Group Inc - ADR 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 Thursday, June 27
• 3 Undervalued IT Services & Consulting Stocks for Wednesday, June 26
• Why Automatic Data Processing Inc’s (ADP) Stock Is Down 4.18%
• Why Backblaze Inc’s (BLZE) Stock Is Up 6.25%

AAII Disclaimer

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