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.

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 Thursday, September 12, 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.

Alithya Group inc’s Value Grade

Value Grade:

Alithya Group inc. is a Canada-based company, which advises on strategy and digital transformation with professionals in Canada, the United States and internationally. It offers consulting and digital technology services to clients in the financial services, insurance, healthcare, government, renewable energy, manufacturing, telecommunications, transportation and logistics, and professional services sectors. Its segments include business strategy, business applications implementation, application services, data and analytics and digital skilling and change enablement. Business Strategy segment helps in decision-making processes regarding strategic consulting, digital transformation, business agility, enterprise architecture, organizational performance and others. Business Applications Implementation segment helps clients deploy company-wide systems, including enterprise resource planning, enterprise performance management, customer relationship management and human capital 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.

Alithya Group inc has a Value Score of 89, which is considered to be undervalued.

When you look at Alithya Group inc’s price-to-sales ratio at 0.25 compared to the industry median at 1.75, this company has a lower price relative to revenue compared to its peers. This could make Alithya Group inc’s stock more attractive for value investors.

Now, let’s assess Alithya Group inc’s EV/EBITDA ratio, also known as enterprise multiple. At 8.9, when compared to the industry median of 14.4, 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. Alithya Group inc’s shareholder yield is higher than its industry median ratio of (1.79%). 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. Alithya Group inc’s price-to-book ratio is lower than its industry median ratio of 2.70. This could make Alithya Group inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Alithya Group inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Alithya Group inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 22.07. This could make Alithya Group inc more attractive because the lower P/FCF ratio indicates that Alithya Group 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.

Gorilla Technology Group Inc’s Value Grade

Value Grade:

Gorilla Technology Group Inc. (Gorilla) is a global solution provider in security intelligence, network intelligence, business intelligence and internet of things (IoT) technology. The Company offers products and services, such as AI Models, AI Appliances and AI SaaS Platforms. Gorilla’s AI Models include video analytics, IT-OT Security Convergence, network anomaly detection, endpoint malware and suspicious behavior detection. Gorilla's AI Appliances include Intelligent Video Analytics (IVA) Appliances, Intelligent Video Analytics Recorder (IVAR) Appliance, Smart Attendance, Event & Video Management System Appliances, and Operation Technology (OT) Security Appliance. Gorilla’s AI SaaS Platforms include Smart Retail, Smart City and Transportation and Endpoint Security. Its machine learning and deep learning algorithms enable its customers to move, store and analyze data for actionable use in biometric authentication and device 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.

Gorilla Technology Group Inc has a Value Score of 95, which is considered to be undervalued.

Gorilla Technology Group Inc’s price-earnings ratio is 1.9 compared to the industry median at 27.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Gorilla Technology Group Inc more attractive for value investors.

Gorilla Technology Group Inc’s price-to-book ratio is higher than its peers. This could make Gorilla Technology Group Inc less attractive for value investors when compared to the industry median at 2.70.

You can read more about Gorilla Technology 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.

Helport AI Ltd’s Value Grade

Value Grade:

Helport AI Limited is an artificial intelligence (AI) technology company serving enterprise customer contact centers with intelligent products, solutions and a digital platform. The Company is focused on providing front-line service staff with real-time guidance and improving every customer interaction with its AI technology, empowering contact center agents to deliver expert-level conversations. It also offers AI-enabled agents for clients with outsourcing needs. The Company’s AI Management Suite provides supervisors with visibility into agent activities, allowing them to focus their time on where they are needed most. Its products include real-time conversation assistance, 100% remote management and hire AI-enabled agents. The Company offers various solutions for industries, such as banking, insurance, government, wealth management, mortgage and real estate.

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.

Helport AI Ltd has a Value Score of 89, which is considered to be undervalued.

Helport AI Ltd’s price-earnings ratio is 21.5 compared to the industry median at 27.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Helport AI Ltd more attractive for value investors.

Helport AI Ltd’s price-to-book ratio is higher than its peers. This could make Helport AI Ltd less attractive for value investors when compared to the industry median at 2.70.

You can read more about Helport AI Ltd’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.

NetScout Systems, Inc.’s Value Grade

Value Grade:

NetScout Systems, Inc. is a provider of performance management, cybersecurity, and distributed denial of service (DDoS) protection solutions. The Company protects the connected world from cyberattacks and performance and availability disruptions through the Company’s visibility platform and solutions powered by its deep packet inspection at scale technology. Its service assurance solutions are used by enterprises (including government agencies) and service providers to optimize network performance, identify and resolve issues impacting application and service quality, and to gain insight into the end user experience. Its primary products are categorized as service assurance solutions for network application performance, and business intelligence analytics and cybersecurity solutions. Its service assurance solutions include nGeniusONE Management Software and Analytic Modules and Visibility Products. Its cybersecurity solutions include DDoS Protection and Advanced Threat Detection.

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.

NetScout Systems, Inc. has a Value Score of 65, which is considered to be undervalued.

NetScout Systems, Inc.’s price-to-book ratio is higher than its peers. This could make NetScout Systems, Inc. less attractive for value investors when compared to the industry median at 2.70.

You can read more about NetScout Systems, 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.

QXO Inc’s Value Grade

Value Grade:

QXO, Inc. provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. It offers consulting and professional services, such as specialized programming, training and technical support, and develops proprietary software. As a value-added reseller of business application software, it offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications. Additionally, it develops and publishes its own proprietary software. Its technologies provide secure cloud hosting, infrastructure-as-a-service (IaaS), managed cloud and information technology services, business technology consulting, custom software development, human capital management, and e-commerce consulting. Its managed network services provide its customers with infrastructure management and robust technology stack support for their entire application ecosystem.

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.

QXO Inc has a Value Score of 64, which is considered to be undervalued.

QXO Inc’s price-to-book ratio is higher than its peers. This could make QXO Inc less attractive for value investors when compared to the industry median at 2.70.

You can read more about QXO 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 2.70.

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.

Xunlei Ltd (ADR)’s Value Grade

Value Grade:

Xunlei Ltd is a company principally engaged in the provision of distributed cloud services. The Company engages in the operation of Internet platform based on cloud technology to enable users to access, store, manage and consume digital media content on the Internet. The Company also provides a wide range of products and services across cloud acceleration, shared cloud computing and digital entertainment to deliver a smart and safe Internet environment to users. The Company delivers products such as Xunlei Accelerator and subscription services. The Company also provides cloud computing services and products, live streaming and other value-added services. The Company mainly conducts its businesses in the domestic market.

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.

Xunlei Ltd (ADR) has a Value Score of 98, which is considered to be undervalued.

Xunlei Ltd (ADR)’s price-earnings ratio is 6.9 compared to the industry median at 27.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Xunlei Ltd (ADR) more attractive for value investors.

Xunlei Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Xunlei Ltd (ADR) less attractive for value investors when compared to the industry median at 2.70.

You can read more about Xunlei 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.

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.

• Alithya Group inc stock has a Value Grade of A.
• Gorilla Technology Group Inc stock has a Value Grade of A.
• Helport AI Ltd stock has a Value Grade of A.
• NetScout Systems, Inc. stock has a Value Grade of B.
• QXO Inc stock has a Value Grade of B.
• Verb Technology Company Inc stock has a Value Grade of B.
• Xunlei Ltd (ADR) 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 Thursday, September 12
• 7 Undervalued IT Services & Consulting Stocks for Wednesday, September 11
• Which Is a Better Investment, Altair Engineering Inc or Insight Enterprises, Inc. Stock?
• Which Is a Better Investment, ASGN Inc or Insight Enterprises, Inc. Stock?

AAII Disclaimer

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