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 Wednesday, September 06, 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.

AgileThought Inc’s Value Grade

Value Grade:

AgileThought, Inc. is a provider of agile-first, end-to-end digital transformation services in the North American market using onshore and nearshore delivery. The Company combines its agile-first approach with expertise in technologies to discover, design, and deliver solutions that help its clients overcome the challenges of digital transformation to build, run and continually improve solutions at scale using DevOps tools and methodologies. It offers client-centric, onshore and nearshore digital transformation services that include consulting, design and user experience, custom enterprise application development, DevOps, cloud computing, mobile, data management, advanced analytics and automation expertise. It creates customized frameworks and solutions throughout clients? digital transformation journeys. By leveraging its AgileThought Operating Model (ATOM) and its industry expertise, it rapidly and predictably delivers enterprise-level software solutions at scale.

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.

AgileThought Inc has a Value Score of 88, which is considered to be undervalued.

When you look at AgileThought Inc’s price-to-sales ratio at 0.05 compared to the industry median at 1.61, this company has a lower price relative to revenue compared to its peers. This could make AgileThought 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. AgileThought Inc’s shareholder yield is lower than its industry median ratio of (1.13%). 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. AgileThought Inc’s price-to-book ratio is lower than its industry median ratio of 2.85. This could make AgileThought Inc more attractive to investors looking for a new addition to their portfolio.

Creative Realities Inc’s Value Grade

Value Grade:

Creative Realities, Inc. is engaged in providing digital solutions to enhance communications in a variety of out-of-home environments by providing digital signage solutions for market segments and use cases, including retail, entertainment and sports venues, restaurants (including quick-serve restaurants), financial services, automotive, medical and healthcare facilities, mixed use developments, corporate communications, employee experience, digital out of home (DOOH) advertising networks. The Company's digital signage software platforms include ReflectView, Reflect Xperience, Reflect AdLogic, Reflect Clarity, Reflect Zero Touch, iShowroomProX, and OSx+. Reflect Xperience is a Web-based interface that allows customers to give content scheduling access to local users through the Web or mobile devices. Its technology and solutions include Digital Merchandising Systems, Digital Sales Assistants, Digital Way-Finders, Digital Kiosks, Digital Menu-Board Systems and Dynamic Digital Signage.

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.

Creative Realities Inc has a Value Score of 69, which is considered to be undervalued.

Creative Realities Inc’s price-to-book ratio is higher than its peers. This could make Creative Realities Inc less attractive for value investors when compared to the industry median at 2.85.

You can read more about Creative Realities 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.

Information Services Group, Inc.’s Value Grade

Value Grade:

Information Services Group, Inc. is a global technology research and advisory firm. The Company is specialized in digital transformation services, including automation, cloud, and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. It supports both private and public sector organizations to transform and optimize their operational environments. It provides an operating model, ISG NEXT, which offers solutions to businesses such as digital transformation and digital investments. It has two global client solution areas: ISG Digital, which is focused on developing technology, transformation, sourcing, and digital solutions for clients, and ISG Enterprise, which is focused on helping clients manage change and optimize operations in such areas as finance, human resources (HR) and Procure2Pay.

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.

Information Services Group, Inc. has a Value Score of 61, which is considered to be undervalued.

Information Services Group, Inc.’s price-earnings ratio is 15.8 compared to the industry median at 25.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Information Services Group, Inc. more attractive for value investors.

Information Services Group, Inc.’s price-to-book ratio is higher than its peers. This could make Information Services Group, Inc. less attractive for value investors when compared to the industry median at 2.85.

You can read more about Information Services 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.

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 72, which is considered to be undervalued.

Baijiayun Group Ltd’s price-earnings ratio is 0.5 compared to the industry median at 25.8. 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 lower than its peers. This could make Baijiayun Group Ltd more attractive for value investors when compared to the industry median at 2.85.

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.

Synchronoss Technologies Inc’s Value Grade

Value Grade:

Synchronoss Technologies, Inc. is a provider of white-label cloud, messaging, digital, and network management solutions. It enables its customers to keep subscribers, systems, networks and content in sync. The Company?s core products include EngageX, OnboardingX and NetworkX. EngageX?s product includes a personal cloud that backup, manages and engages with content; advanced messaging that has multi-channel messaging, peer-to-peer communications and application-to-person commerce solutions, and an e-mail suite that has white-label consumer e-mail solutions. OnboardingX product includes backup and restores that backup, view and restore subscriber content across operating systems and devices; out of box experience that streamlines the activation of new services and devices, and content transfer that move content between mobile devices. NetworkX product includes an integrated application suite that designs, procures, manages and optimizes telecommunication network infrastructure.

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.

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

Synchronoss Technologies Inc’s price-to-book ratio is higher than its peers. This could make Synchronoss Technologies Inc less attractive for value investors when compared to the industry median at 2.85.

You can read more about Synchronoss 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.

System1 Inc’s Value Grade

Value Grade:

System1, Inc. operates an omnichannel customer acquisition platform, delivering high-intent customers to advertisers and marketing antivirus software packages to end user customers. The Company provides its omnichannel customer acquisition platform services through its responsive acquisition marketing platform (RAMP). Operating across advertising networks and advertising category verticals to acquire users, RAMP allows it to monetize these acquired users through its relationships with third party advertisers and advertising networks (Advertising Partners). RAMP also allows third party advertising platforms and publishers (Network Partners) to send user traffic to, and monetize user traffic on, its owned and operated Websites or throughout its monetization agreements. RAMP operates across its network of owned and operated Websites, allowing it to monetize user traffic that it sources from various acquisition marketing channels, including Google, Facebook, Taboola and Zemanta.

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 72, 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 2.85.

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.

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.

• AgileThought Inc stock has a Value Grade of A.
• Creative Realities Inc stock has a Value Grade of B.
• Information Services Group, Inc. stock has a Value Grade of B.
• Baijiayun Group Ltd stock has a Value Grade of B.
• Synchronoss Technologies Inc stock has a Value Grade of B.
• System1 Inc stock has a Value Grade of B.

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 Wednesday, September 06
• What You Need to Know About Nutanix Inc's Q4 Earnings
• 4 Undervalued IT Services & Consulting Stocks for Tuesday, September 05
• What You Need to Know About Crowdstrike Holdings Inc's Q2 Earnings

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.