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.

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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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 Monday, May 01, 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.

Edgio Inc’s Value Grade

Value Grade:

Edgio, Inc. (Edgio), a provider of content delivery services, edge security, video services, AppOps, and Jamstack application architecture, provides powerful tools to optimise and deliver digital experiences. The Company offers solutions across Web applications, content delivery, and video streaming that deliver performance, protection, and productivity for global digital needs. The Company operates through the content delivery and related services segment. It offers optimized private networks to provide edge services. The Company?s products include applications and media. Edgio Applications is a comprehensive platform designed to offer the highest levels of WebApp security and site performance. Its media products include Uplynk, Delivery, and Open Edge. The Company?s solutions include maximizing website performance, developer team velocity, protecting websites and applications, broadcast transformation, live streaming, and media and entertainment.

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.

Edgio Inc has a Value Score of 63, which is considered to be undervalued.

When you look at Edgio Inc’s price-to-sales ratio at 0.46 compared to the industry median at 1.65, this company has a lower price relative to revenue compared to its peers. This could make Edgio Inc’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. Edgio Inc’s shareholder yield is lower than its industry median ratio of (1.15%). 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. Edgio Inc’s price-to-book ratio is lower than its industry median ratio of 2.27. This could make Edgio Inc more attractive to investors looking for a new addition to their portfolio.

PowerFleet Inc’s Value Grade

Value Grade:

PowerFleet, Inc. is a provider of internet of things (IoT) software-as-a-service (SaaS) solution, which provides valuable business intelligence for managing high-value enterprise assets. The Company?s enterprise software applications have machine learning capabilities and are built to integrate with its customers? management systems to provide a single, integrated view of asset and operator activity across multiple locations while providing real-time enterprise-wide benchmarks and peer-industry comparisons. Its cloud-based software applications provide a single, integrated view of asset activity across multiple locations, generating enterprise-wide benchmarks, peer-industry comparisons, and deeper insights into asset operations. Its services include hosting services, software as a service, maintenance services and customer support and consulting services for ease of use, adoption, and added value. Its offerings are sold under the global brands Powerfleet, Pointer, and Cellocator.

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.

PowerFleet Inc has a Value Score of 62, which is considered to be undervalued.

PowerFleet Inc’s price-to-book ratio is higher than its peers. This could make PowerFleet Inc less attractive for value investors when compared to the industry median at 2.27.

You can read more about PowerFleet 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 a customer acquisition platform, Responsive Acquisition Marketing Platform (RAMP). RAMP is omni-channel and omni-vertical and built for a privacy-centric world. RAMP enables the building of various brands, the development and growth of a suite of privacy-focused products, and the delivery of high-intent customers to advertising partners. RAMP consists of three components. First, RAMP utilizes machine learning to identify and direct marketing campaigns to potential customers. Second, RAMP directs them to its network of approximately 40 owned and operated websites focused on further qualifying customer purchase intent. Its Websites include various search engines, such as info.com and Startpage.com, and digital media sites and utilities, such as HowStuffWorks, MapQuest, and WalletGenius, among others. Third, RAMP helps in delivering advertisements either provided by its advertisers or advertising networks or for its own subscription products.

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 76, 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 2.27.

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.

Unisys Corp’s Value Grade

Value Grade:

Unisys Corporation is a global technology solutions company. The Company operates through three segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I;), and Enterprise Computing Solutions (ECS). The DWS segment provides modern and traditional workplace solutions. The CA&I; segment provides digital platforms, applications, and infrastructure solutions. The ECS segment provides solutions that harness secure, continuous high-intensity computing and enable digital services through software-defined operating environments. It has developed a portfolio of platforms, enterprise software and technology products that support the delivery of its primary solutions. Its products include Unisys InteliServe, PowerSuite, CloudForte, ClearPath Forward, and Unisys Stealth. Unisys InteliServe offers a suite of technologies for omnichannel support, advanced analytics, automation, artificial intelligence, and machine learning and identity authentication.

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.

Unisys Corp has a Value Score of 69, which is considered to be undervalued.

You can read more about Unisys Corp’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.

WidePoint Corporation’s Value Grade

Value Grade:

WidePoint Corporation is a provider of technology management as a service (TMaaS). TMaaS consists of federally certified communications management, identity management, interactive bill presentment and analytics, and information technology (IT) as a service solution. It provides a range of services, which includes telecom lifecycle management, mobile and identity management, digital billing and analytics solutions, and IT as a service (ITaaS). It offers telecom lifecycle management solutions to enterprises both in the public and private sectors. The mobile and identity management solution offers federally certified digital certificates and credentials that enable its customers to provide multifactor authentication (MFA) solutions. The digital billing and analytics solutions offer billing communications and analytics solutions to large communications service providers (CSPs). Its IT as a service solution offers cybersecurity, cloud services, network operations and professional 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.

WidePoint Corporation has a Value Score of 97, which is considered to be undervalued.

WidePoint Corporation’s price-to-book ratio is higher than its peers. This could make WidePoint Corporation less attractive for value investors when compared to the industry median at 2.27.

You can read more about WidePoint Corporation’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’s Value Grade

Value Grade:

Xunlei Limited is a China-based innovator in shared cloud computing and blockchain technology. The Company operates an Internet platform in China based on cloud computing to enable users to access, manage and consume digital media content. The Company's acceleration products and services include Xunlei Accelerator, which enables users to accelerate digital transmission over the Internet, and cloud acceleration subscription services, which offer user services for speed and reliability. The Company's Xunlei Accelerator allows users to accelerate digital transmission over the Internet. Xunlei Accelerator also bridges users with diverse needs to other services it offers, such as Xunlei Media Player, which supports both online and offline video watching, and its various online games, including Web games and massively multiplayer online games (MMOGs), by recommending and providing links to these services on its user interface.

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

Xunlei Ltd’s price-earnings ratio is 5.0 compared to the industry median at 24.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Xunlei Ltd more attractive for value investors.

Xunlei Ltd’s price-to-book ratio is higher than its peers. This could make Xunlei Ltd less attractive for value investors when compared to the industry median at 2.27.

You can read more about Xunlei 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.

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.

• Edgio Inc stock has a Value Grade of B.
• PowerFleet Inc stock has a Value Grade of B.
• System1 Inc stock has a Value Grade of B.
• Unisys Corp stock has a Value Grade of B.
• WidePoint Corporation stock has a Value Grade of A.
• Xunlei Ltd stock has a Value Grade of A.

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 Monday, May 01
• 4 Undervalued IT Services & Consulting Stocks for Friday, April 28
• Which Is a Better Investment, Accenture Plc or Manhattan Associates Inc Stock?
• Which Is a Better Investment, Akamai Technologies, Inc. or Manhattan Associates Inc Stock?

AAII Disclaimer

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