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.

Latest IT Services & Consulting Stock News

Before choosing which top IT Services & Consulting stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The fundamental outlook for the IT Services and Consulting sub-industry for the next 12 months is positive. Client demand for highly sought after for highly sought-after services such as custom-built integrations are expected to grow strongly in 2022.  Geopolitical impacts from the Russia-Ukraine are expected to be more isolated in nature across the industry. Companies with a significant number of employees in Russia and Ukraine have been hit hard as fears around an inability to deliver consulting, engineering, and integration services remain a key risk. Conversely, for companies with employees spread across several regions, incremental revenue opportunities exist as clients in more impacted areas plan for contingencies if a worst-case scenario occurs. Revenues are expected to increase 18.1% and adjusted earnings per share 20.2% in 2022, driven by increased digital spending as opposed to spending on traditional projects. Headcount utilization and attrition levels will be key areas to watch throughout 2022 as underperformance could be driven by inability to source talent. The S&P 1500 IT Consulting Services Index is down 14.8% through April 1, 2022, compared to 4.6% from the S&P 1500. Much of the underperformance is attributed to outliers with significant exposure to the recent series of geopolitical events. For reference, the sub-industry index rose 35% in 2021, topping the S&P 1500 gain of 26.7% during the same timeframe.

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 Wednesday, April 12, 2023. 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 engaged in delivering technology-led business process solutions for businesses and governments globally. Its segments include Commercial, Government, and Transportation. The Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries. The Government segment provides government-centric business process services to United States federal, state, local and foreign governments for public assistance, health services, program administration, transaction processing and payment services. The Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients. Its technology-led solutions and services include customer experience management, business operations solutions, healthcare claims and administration solutions and human capital solutions. It also offers a full range of omni-channel customer contact services and customer communications.

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 81, which is considered to be undervalued.

When you look at Conduent Inc’s price-to-sales ratio at 0.20 compared to the industry median at 1.66, 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 13.0, 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 lower than its industry median ratio of (1.14%). 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 2.38. 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 lower than its industry median ratio of 22.88. This could make Conduent Inc more attractive because the lower 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.

Computer Task Group, Inc.’s Value Grade

Value Grade:

Computer Task Group, Incorporated is an information and technology solutions company, which operates in North and South America, Western Europe, and India. It provides information technology (IT) and related services to its clients. These services include information and technology-related solutions, including staffing as a solution. Its segments include North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services. Its digital transformation solutions portfolio includes business process transformation solutions, technology transformation solutions and operations transformation solutions. Its business process transformation solutions services include advisory, data strategy, digital workplace, enterprise platforms, information disclosure, and regulatory and compliance. Its technology transformation solutions services include application development, automation, cloud, data management, enterprise platform implementation, and testing.

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.

Computer Task Group, Inc. has a Value Score of 73, which is considered to be undervalued.

Computer Task Group, Inc.’s price-earnings ratio is 15.4 compared to the industry median at 24.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Computer Task Group, Inc. more attractive for value investors.

Computer Task Group, Inc.’s price-to-book ratio is higher than its peers. This could make Computer Task Group, Inc. less attractive for value investors when compared to the industry median at 2.38.

You can read more about Computer Task 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.

Cyxtera Technologies Inc’s Value Grade

Value Grade:

Cyxtera Technologies, Inc. provides data centers in retail colocation and interconnection services. It provides a range of data center products and services that are specifically designed to address the needs of enterprises, service providers and government agencies. Its primary service and product offerings include colocation, interconnection, bare metal, Cyxtera SmartCabs, deployment services and gold support. Its colocation services provide customers space and power in data centers for applications and workloads in an integrated ecosystem. Its interconnection is a global data center that delivers the local, global and cloud connectivity options customers need for distributed hybrid information technology (IT). Its bare metal is an on-demand IT infrastructure solution that allows customers to consume its data center services in a cloud-like fashion. It offers a variety of value-added services to help customers streamline data center deployment and reduce time-to-solution.

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.

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

Cyxtera Technologies Inc’s price-to-book ratio is higher than its peers. This could make Cyxtera Technologies Inc less attractive for value investors when compared to the industry median at 2.38.

You can read more about Cyxtera 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.

ePlus inc’s Value Grade

Value Grade:

ePlus inc. is a holding company. The Company is engaged in the business of selling, leasing, financing and managing information technology (IT). The Company operates through two segments: technology and financing. Its technology segment sells IT hardware products, third-party software and maintenance contracts, its own and third-party advanced professional and managed services, and its software. Its financing segment operations primarily consist of the financing of IT equipment, software, and related services. Both segments sell its products to commercial entities, state and local governments, government contractors, and educational institutions. The Company provides IT solutions, which enable organizations to optimize their IT environment and supply chain processes. It also provides consulting, professional, and managed services, IT staff augmentation, and complete lifecycle management services, including flexible financing and 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.

ePlus inc has a Value Score of 68, which is considered to be undervalued.

ePlus inc’s price-earnings ratio is 12.2 compared to the industry median at 24.7. 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 2.38.

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.

Baijiayun Group Ltd’s Value Grade

Value Grade:

Baijiayun Group Ltd, formerly Fuwei Films (Holdings) Co Ltd, is a video-centric technology solutions provider company. The Company's software-as-a-service (SaaS) and platform-as-a-service (PaaS) solutions businesses mainly provide Live streaming, video-on-demand (VOD) and real-time communication solutions (BRTC), such as dual-teacher classrooms, small class courses, real-time video and interactive live streaming, etc. The cloud related services business mainly provides customized platform development services, software license and other cloud related service, such as: exam and assessment, online school management, video conferencing and corporate training, etc. The artificial intelligence (AI) solutions business mainly provides image analysis and recognition functions. The Company's products are used in various fields, including education, finance, medical services, auto industry and Internet Technology (IT) industry.

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.

Baijiayun Group Ltd has a Value Score of 97, which is considered to be undervalued.

Baijiayun Group Ltd’s price-earnings ratio is 2.4 compared to the industry median at 24.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Baijiayun Group Ltd more attractive for value investors.

Baijiayun Group Ltd’s price-to-book ratio is higher than its peers. This could make Baijiayun Group Ltd less attractive for value investors when compared to the industry median at 2.38.

You can read more about Baijiayun Group 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.

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 provides its services principally through offices located in Edison, New Jersey and Long Island, 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.

TSR Inc has a Value Score of 77, which is considered to be undervalued.

TSR Inc’s price-earnings ratio is 12.1 compared to the industry median at 24.7. 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 2.38.

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.

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 72, 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 2.38.

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 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.

• Conduent Inc stock has a Value Grade of A.
• Computer Task Group, Inc. stock has a Value Grade of B.
• Cyxtera Technologies Inc stock has a Value Grade of B.
• ePlus inc stock has a Value Grade of B.
• Baijiayun Group Ltd stock has a Value Grade of A.
• TSR 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 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 Wednesday, April 12
• 7 Undervalued IT Services & Consulting Stocks for Tuesday, April 11
• Which Is a Better Investment, CGI Inc or Siemens AG (ADR) Stock?
• Why Fastly Inc’s (FSLY) Stock Is Up 8.13%

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