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 Professional Services 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 Professional Services 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 Professional Services 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 Professional Services industry for Thursday, November 07, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Professional Services 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.

Clarivate Plc’s Value Grade

Value Grade:

Clarivate Plc operates as an information services provider in the Americas, the Middle East, Africa, Europe, and the Asia Pacific. It operates through three segments: Academia & Government, Life Sciences & Healthcare, and Intellectual Property. The company offers Web of Science and InCites, that analyzes and explores the academic research landscape and manages research information; ProQuest One and Ebook Central that provides comprehensive content collections to institutions in a cost-effective manner; and Alma and Polaris, that manages academic resources and services, connect users, and support research publications. It also provides Patent and Trademark Renewals, that supports paralegal and admin tasks throughout the patent and trademark protection and maintenance process; CompuMark and Derwent, that supports critical decisions around patent and trademark protection, risk, and value creation throughout the innovation and brand lifecycle; IPFolio and Foundation IP that creates a structured environment for the protection and management of global patent and trademark assets. In addition, the company offers Cortellis Competitive Intelligence and Cortellis Drug Discovery Intelligence, that supports the development of new drugs and medical devices from discovery to clinical trials; Cortellis Regulatory Intelligence and OFF-X to monitor drug safety issues and adhere to regulatory protocols; Real World Data and Optimize that inform commercial launch strategy and set pricing for optimal reimbursement. It serves corporations, universities, law firms, government agencies, public libraries, and other professional services organizations. The company was formerly known as Clarivate Analytics Plc and changed its name to Clarivate Plc in May 2020. Clarivate Plc was founded in 1864 and is headquartered in London, the United Kingdom.

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.

Clarivate Plc has a Value Score of 67, which is considered to be undervalued.

When you look at Clarivate Plc’s price-to-sales ratio at 1.29 compared to the industry median at 1.49, this company has a lower price relative to revenue compared to its peers. This could make Clarivate Plc’s stock more attractive for value investors.

Now, let’s assess Clarivate Plc’s EV/EBITDA ratio, also known as enterprise multiple. At 10.7, when compared to the industry median of 13.4, 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. Clarivate Plc’s shareholder yield is lower than its industry median ratio of 0.95%. 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. Clarivate Plc’s price-to-book ratio is lower than its industry median ratio of 3.23. This could make Clarivate Plc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Clarivate Plc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Clarivate Plc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 23.70. This could make Clarivate Plc more attractive because the lower P/FCF ratio indicates that Clarivate Plc 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.

Forrester Research, Inc.’s Value Grade

Value Grade:

Forrester Research, Inc. operates as an independent research and advisory company in the United States and internationally. The company operates in three segments: Research, Consulting, and Events. The Research segment primary subscription research services include Forrester Decisions, Forrester Research, and SiriusDecisions Research, which are designed to provide business and technology leaders with a proven path to growth through customer obsession. This segment delivers content, such as future trends, predictions, and market forecasts; deep consumer and business buyer data and insights; curated best practice models and tools to run business functions; operational and performance benchmarking data; and technology and service market landscapes and vendor evaluations. The Consulting segment provides consulting projects, include conducting maturity assessments, prioritizing best practices, developing strategies, building business cases, selecting technology vendors, structuring organizations, developing content marketing strategies and collateral, and sales tools; and advisory services. The Events segment hosts events related to business-to-business marketing, sales and product leadership, customer experience, security and risk, new technology and innovation, and data strategies and insights. The company sells its products and services through direct sales force in various locations. Forrester Research, Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.

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.

Forrester Research, Inc. has a Value Score of 67, which is considered to be undervalued.

Forrester Research, Inc.’s price-to-book ratio is higher than its peers. This could make Forrester Research, Inc. less attractive for value investors when compared to the industry median at 3.23.

You can read more about Forrester Research, 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.

Graphex Group Limited’s Value Grade

Value Grade:

Graphex Group Limited, together with its subsidiaries, engages in the processing and sale of graphite and graphene products in Mainland China, Hong Kong, and internationally. The company operates through two segments: Graphene Products and Related Businesses, and Other Businesses. It provides spherical graphite to produce Li-Ion battery anodes; coated spherical graphite that is used to form the Li-Ion battery anode; and synthetic graphite. The company also offers related graphene products comprising high-purity graphite for magnesia carbon bricks, high grade refractories, stabilizers, carbon brushes, and fire-resistant composite materials; and micronized graphite for corrosion-resistant coating, lubricants, and other new composite materials. In addition, it provides landscape architecture and catering management services. The company was formerly known as Earthasia International Holdings Limited and changed its name to Graphex Group Limited in April 2021. Graphex Group Limited was founded in 1981 and is headquartered in Causeway Bay, Hong Kong.

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.

Graphex Group Limited has a Value Score of 62, which is considered to be undervalued.

Graphex Group Limited’s price-to-book ratio is higher than its peers. This could make Graphex Group Limited less attractive for value investors when compared to the industry median at 3.23.

You can read more about Graphex Group Limited’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.

Lichen China Limited’s Value Grade

Value Grade:

Lichen China Limited, an investment holding company, provides financial and taxation services in the People’s Republic of China. The company offers financial and taxation related management consultation services in relation to cost management, financial risk management, computerized financial information systems, and financial management system optimization; internal control management consultation services that cover internal control management system, internal audit system, and account system to enhance internal control and accounting capabilities; annual or regular consultation services in finance, taxation, and post financial and management or internal control project implementation; and internal training and general consultation services. It also provides education support services comprises marketing, operational, and technical support; and sells teaching and learning materials in relation to accounting licensing, accounting practice, financial management, financial tools, on-financial management, and taxation practice courses. In addition, the company provides Lichen Education Accounting Practice System V1.0, a financial and taxation training software, and academic affairs management system to partnered institutions under the partnership agreements, as well as offers software installation, training, and after sales technical and maintenance support services. Lichen China Limited was founded in 2004 and is based in Xiamen, the People’s Republic of China. Lichen China Limited is a subsidiary of Silver Sky Investment Limited.

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.

Lichen China Limited has a Value Score of 68, which is considered to be undervalued.

Lichen China Limited’s price-earnings ratio is 7.3 compared to the industry median at 28.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Lichen China Limited more attractive for value investors.

Lichen China Limited’s price-to-book ratio is higher than its peers. This could make Lichen China Limited less attractive for value investors when compared to the industry median at 3.23.

You can read more about Lichen China Limited’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.

ManpowerGroup Inc.’s Value Grade

Value Grade:

ManpowerGroup Inc. provides workforce solutions and services worldwide. The company offers recruitment services, including permanent, temporary, and contract recruitment of professionals, as well as administrative and industrial positions under the Manpower and Experis brands. It also offers various assessment services; training and development services; career and talent management; and outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives. In addition, the company provides workforce consulting services; contingent staffing and permanent recruitment services; professional resourcing and project-based services; and recruitment process outsourcing, TAPFIN managed, and talent solutions. The company was incorporated in 1948 and is headquartered in Milwaukee, Wisconsin.

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.

ManpowerGroup Inc. has a Value Score of 73, which is considered to be undervalued.

ManpowerGroup Inc.’s price-earnings ratio is 84.4 compared to the industry median at 28.4. This means that it has a higher price relative to its earnings compared to its peers. This makes ManpowerGroup Inc. less attractive for value investors.

ManpowerGroup Inc.’s price-to-book ratio is higher than its peers. This could make ManpowerGroup Inc. less attractive for value investors when compared to the industry median at 3.23.

You can read more about ManpowerGroup 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.

Steel Connect, Inc.’s Value Grade

Value Grade:

Steel Connect, Inc., together with its subsidiaries, provides supply chain services in the United States, Mainland China, Netherlands, and internationally. It offers product configuration and packaging, kitting, and assembly of components and parts into finished goods; and value-added processes, such as product testing, radio frequency identification tagging, product or service activation, language settings, personalization and engraving, multi-channel packaging, and packaging design services. The company provides fulfillment services comprising order management, pick, pack and ship, retail compliance, and demand planning services; and reverse logistics services that simplifies the returns process for retailers and manufacturers, as well as operates a cloud-based e-commerce platform. In addition, it offers warehousing and inventory management services; and software licenses, maintenance, and support services. Further, the company offers its supply chain services to customers in the consumer electronics, communications, computing, medical devices, software, and retail markets. The company was formerly known as ModusLink Global Solutions, Inc. and changed its name to Steel Connect, Inc. in February 2018. Steel Connect, Inc. was incorporated in 1986 and is headquartered in New York, New York.

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.

Steel Connect, Inc. has a Value Score of 99, which is considered to be undervalued.

Steel Connect, Inc.’s price-earnings ratio is 3.3 compared to the industry median at 28.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Steel Connect, Inc. more attractive for value investors.

Steel Connect, Inc.’s price-to-book ratio is higher than its peers. This could make Steel Connect, Inc. less attractive for value investors when compared to the industry median at 3.23.

You can read more about Steel Connect, 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.

Exela Technologies, Inc.’s Value Grade

Value Grade:

Exela Technologies, Inc. provides transaction processing solutions, enterprise information management, document management, and digital business process services worldwide. It operates in three segments: Information & Transaction Processing Solutions (ITPS), Healthcare Solutions (HS), and Legal & Loss Prevention Services (LLPS). The ITPS segment provides lending solutions for mortgages and auto loans; banking solutions for clearing, anti-money laundering, sanctions, and interbank cross-border settlement; property and casualty insurance solutions for origination, enrollments, claims processing, and benefits administration communications; and public sector solutions for income tax processing, benefits administration, and records management. It also offers solutions for payment processing and reconciliation, integrated receivable and payables management, document logistics and location services, records management, and electronic storage of data and documents; and software, hardware, professional, and maintenance services related to information and transaction processing automation. Its HS segment provides revenue cycle solutions, integrated accounts payable and accounts receivable, and information management; claims processing, and claims adjudication and auditing services; enrollment processing and policy management services; scheduling and prescription management services; and medical coding and insurance claim generation, underpayment audit and recovery, and medical records management services. The LLPS segment processes legal claims for class action and mass action settlement administrations, involving project management support, notification, and outreach to claimants; and collects, analyzes, and distributes settlement funds. It also offers data and analytical services in the areas of litigation consulting, economic and statistical analysis, expert witness services, and revenue recovery services for delinquent accounts receivable. The company was incorporated in 2014 and is headquartered in Irving, Texas.

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.

Exela Technologies, Inc. has a Value Score of 80, which is considered to be undervalued.

You can read more about Exela 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.

Other Professional Services 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 Professional Services stocks as well as other industrys.

Choosing Which of the 7 Best Professional Services 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.

• Clarivate Plc stock has a Value Grade of B.
• Forrester Research, Inc. stock has a Value Grade of B.
• Graphex Group Limited stock has a Value Grade of B.
• Lichen China Limited stock has a Value Grade of B.
• ManpowerGroup Inc. stock has a Value Grade of B.
• Steel Connect, Inc. stock has a Value Grade of A.
• Exela Technologies, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 undervalued stocks in the Professional Services 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 Professional Services Stocks

Want to learn more about Professional Services 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 Professional Services Stocks for Thursday, November 07
• 5 Undervalued Professional Services Stocks for Wednesday, November 06
• 5 Undervalued Professional Services Stocks for Tuesday, November 05
• 5 Undervalued Professional Services Stocks for Monday, November 04

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.