Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 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 5 undervalued stocks in the IT Services & Consulting industry for Monday, July 01, 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.

Conduent Inc’s Value Grade

Value Grade:

Conduent Incorporated is a technology-led business process solutions company. The Company operates through three segments: Commercial, Government, and Transportation. The Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries. Its solutions and services include Customer Experience Management (CXM), Business Operations Solutions (BOS), Healthcare Claims and Administration Solutions and Human Capital Solutions. The Government segment include government healthcare solutions and government service solutions. Its Government Healthcare Solutions provide mission-critical program administration solutions for government healthcare programs with a range of solutions such as Medicaid management, provider services, and Medicaid business intelligence. The Transportation segment includes road usage charging and management solutions and transit 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.

Conduent Inc has a Value Score of 82, which is considered to be undervalued.

When you look at Conduent Inc’s price-to-sales ratio at 0.18 compared to the industry median at 1.67, this company has a lower price relative to revenue compared to its peers. This could make Conduent Inc’s stock more attractive for value investors.

Now, let’s assess Conduent Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 4.4, when compared to the industry median of 15.4, 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. Conduent Inc’s shareholder yield is higher 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. Conduent Inc’s price-to-book ratio is lower than its industry median ratio of 2.57. This could make Conduent Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Conduent Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Conduent Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 23.03. This could make Conduent Inc less attractive because the higher P/FCF ratio indicates that Conduent Inc 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.

ePlus inc’s Value Grade

Value Grade:

ePlus inc. is a provider of technology solutions across the spectrum spanning security, cloud, data center, networking, collaboration, artificial intelligence, and emerging solutions. The Company’s segments include Product, Professional Services, Managed Services, and Financing. The Product segment includes sales of information technology (IT) products, third-party software, and third-party maintenance, software assurance, and other third-party services. The Professional services segment includes its advanced professional services, staff augmentation, project management services, cloud consulting services and security services. The Managed services segment includes its advanced managed services, service desk, storage-as-a-service, cloud hosted services, cloud managed services and managed security services. The Financing segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors.

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.

ePlus inc has a Value Score of 61, which is considered to be undervalued.

ePlus inc’s price-earnings ratio is 17.0 compared to the industry median at 26.6. This means that it has a lower price relative to its earnings compared to its peers. This makes ePlus inc more attractive for value investors.

ePlus inc’s price-to-book ratio is higher than its peers. This could make ePlus inc less attractive for value investors when compared to the industry median at 2.57.

You can read more about ePlus 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's segments include Degree Program Segment and Alternative Credential Segment. Degree Program Segment provides technology and services to nonprofit colleges and universities to enable the online delivery of degree programs. Students enrolled in these programs are seeking an undergraduate or graduate degree. Alternative Credential Segment provides premium online open courses, executive education offerings, technical, skills-based boot camps to individual consumers through relationships with nonprofit colleges and universities and other organizations. It also offers an enterprise solution that it sells to organizations and institutions to enable upskilling and reskilling of their workforces. Through edX, its education consumer marketplace, the Company offers more than 4,500 online learning opportunities. Its offerings cover a range of topics, including artificial intelligence, business, healthcare, education, and social work.

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 95, 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 2.57.

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.

Verb Technology Company Inc’s Value Grade

Value Grade:

Verb Technology Company, Inc. is an interactive video-based sales applications Company. The Company’s MARKET.live platform is a multi-vendor, multi-presenter, livestream social shopping destination at the forefront of the convergence of ecommerce and entertainment, where retailers, brands, creators and influencers can monetize their base of fans and followers across social media channels. Its software-as-a-service (SaaS) product verbCRM, a customer relationship management (CRM) application, to which the Company’s clients can add a choice of enhanced, fully integrated application modules that include verbLEARN, its gamified learning management system application; verbLIVE, a live stream interactive ecommerce application, and verbPULSE, a business/augmented intelligence notification and sales coach application. Its verbTEAMS is a standalone, self-onboarding, video-based CRM and content management application for life sciences companies, professional sports teams, and small businesses.

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.

Verb Technology Company Inc has a Value Score of 73, which is considered to be undervalued.

Verb Technology Company Inc’s price-to-book ratio is higher than its peers. This could make Verb Technology Company Inc less attractive for value investors when compared to the industry median at 2.57.

You can read more about Verb Technology Company 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 63, 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 2.57.

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 5 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.

• Conduent Inc stock has a Value Grade of A.
• ePlus inc stock has a Value Grade of B.
• 2U Inc stock has a Value Grade of A.
• Verb Technology Company Inc stock has a Value Grade of B.
• VNET Group Inc - ADR stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued IT Services & Consulting Stocks for Monday, July 01
• 4 Undervalued IT Services & Consulting Stocks for Friday, June 28
• Why Ads-Tec Energy PLC’s (ADSE) Stock Is Up 4.85%
• Why Karooooo Ltd’s (KARO) Stock Is Up 4.64%

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.