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.

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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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 Thursday, June 29, 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.

Castellum Inc’s Value Grade

Value Grade:

Castellum Inc. is a technology company. It is engaged in cybersecurity, software development, systems engineering, information / electronic warfare, program support and data analytics services. It offers artificial intelligence / machine learning, 5G technologies, model-based systems engineering, program management, information assurance, intelligence analysis, and cybersecurity maturity model certification compliance. It specializes in planning and intelligence support for information warfare and information operations (IW/IO). It develops IW/IO plans, exercises, doctrine, and training for the Military Services and the Combatant Commands in domestic and deployed overseas locations. It provides platform integration, modernization, and sustainment; system engineering; naval architecture; training and simulation services, and logistics engineering. It offers expertise and technology to defense, intelligence, and civilian agencies of the United States federal, state and local governments.

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.

Castellum Inc has a Value Score of 68, which is considered to be undervalued.

When you look at Castellum Inc’s price-to-sales ratio at 0.48 compared to the industry median at 1.61, this company has a lower price relative to revenue compared to its peers. This could make Castellum 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. Castellum Inc’s shareholder yield is lower than its industry median ratio of (1.11%). 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. Castellum Inc’s price-to-book ratio is lower than its industry median ratio of 2.56. This could make Castellum Inc more attractive to investors looking for a new addition to their portfolio.

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 2.56.

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.

NetSol Technologies Inc.’s Value Grade

Value Grade:

NetSol Technologies, Inc. is a provider of information technology (IT) and enterprise software solutions to the global finance and leasing industry. The Company is engaged in licensing, subscriptions, modification, enhancement and support of its suite of financial applications, under the brand name NFS Ascent, for the businesses in the global finance and leasing space. The Company operates through three segments: North America, Europe and Asia-Pacific. Its products and services include NFS Ascent, NFS Ascent enables auto, equipment and big-ticket finance companies, alongside banks, to run their retail and wholesale finance business with ease. NFS Ascent applications include Ascents Omni Point of Sale (Omni POS), Ascents Contract Management System (CMS), Ascent Wholesale Finance System (WFS), Dealer Auditor Access System (DAAS), NFS Ascent deployed on the cloud and NFS Digital. It also offers Otoz Digital Auto Retail and Mobility Orchestration, Otoz Ecosystem and Flex.

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.

NetSol Technologies Inc. has a Value Score of 84, which is considered to be undervalued.

NetSol Technologies Inc.’s price-to-book ratio is higher than its peers. This could make NetSol Technologies Inc. less attractive for value investors when compared to the industry median at 2.56.

You can read more about NetSol 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.

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 86, which is considered to be undervalued.

TSR Inc’s price-earnings ratio is 9.2 compared to the industry median at 25.9. 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 2.56.

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.

Verb Technology Company Inc’s Value Grade

Value Grade:

Verb Technology Company, Inc. is a software-as-a-service (SaaS) applications platform developer. Its SaaS platform for the direct sales industry is comprised of a suite of video-based sales enablement business software products marketed on a subscription basis. Available in both mobile and desktop versions, verbCRM is a fully integrated application modules that include, verbLEARN, its gamified learning management system application. Its verbLIVE is a live stream e-commerce application. Its verbPULSE is 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, small businesses, and solopreneurs, with one-button synchronization with Salesforce, that also comes bundled with verbLIVE. Its MARKET.live is a multi-vendor, multi-presenter, livestream social shopping platform, that combines e-commerce 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.

Verb Technology Company Inc has a Value Score of 64, 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 2.56.

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.

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.

• Castellum Inc stock has a Value Grade of B.
• Cyxtera Technologies Inc stock has a Value Grade of B.
• NetSol Technologies Inc. stock has a Value Grade of A.
• TSR Inc stock has a Value Grade of A.
• Verb Technology Company Inc 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 Thursday, June 29
• 7 Undervalued IT Services & Consulting Stocks for Wednesday, June 28
• Why AvePoint Inc’s (AVPT) Stock Is Up 4.19%
• Why GDS Holdings Ltd - ADR’s (GDS) Stock Is Down 4.01%

AAII Disclaimer

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