BAH vs. IT: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Consulting Services sector have probably already heard of Booz Allen Hamilton (BAH) and Gartner (IT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Booz Allen Hamilton has a Zacks Rank of #2 (Buy), while Gartner has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BAH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BAH currently has a forward P/E ratio of 23.25, while IT has a forward P/E of 43.61. We also note that BAH has a PEG ratio of 1.75. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IT currently has a PEG ratio of 3.24.
Another notable valuation metric for BAH is its P/B ratio of 15.34. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, IT has a P/B of 37.71.
These are just a few of the metrics contributing to BAH's Value grade of B and IT's Value grade of D.
BAH has seen stronger estimate revision activity and sports more attractive valuation metrics than IT, so it seems like value investors will conclude that BAH is the superior option right now.
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Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
Gartner, Inc. (IT) : Free Stock Analysis Report