CTSH vs. EPAM: Which Stock Should Value Investors Buy Now?

Zacks analysis suggests Cognizant (CTSH) is currently a better value investment than EPAM Systems (EPAM). CTSH has a superior Zacks Rank of #2 (Buy) compared to EPAM's #3 (Hold), along with a Value grade of B versus EPAM's C, based on metrics including forward P/E ratios of 15.96 and 16.84 respectively, and P/B ratios of 2.68 and 2.83 respectively.

Analysis

The comparative analysis of Cognizant (CTSH) and Epam Systems (EPAM) within the Computers - IT Services sector, based on Zacks Investment Research methodology, indicates a more favorable value proposition for CTSH at present. Cognizant holds a Zacks Rank of #2 (Buy), signifying positive earnings estimate revision trends, which suggests an improving earnings outlook. In contrast, Epam is ranked #3 (Hold). From a valuation perspective, CTSH exhibits more attractive metrics: its forward Price-to-Earnings (P/E) ratio is 15.96, lower than EPAM's 16.84. Furthermore, CTSH's Price-to-Earnings-Growth (PEG) ratio of 1.85 is marginally better than EPAM's 1.89, and its Price-to-Book (P/B) ratio of 2.68 is also lower than EPAM's 2.83. These quantitative factors contribute to CTSH's superior Value Grade of 'B' in the Zacks Style Scores system, compared to EPAM's 'C', reinforcing the assessment that CTSH currently presents a stronger case for value-oriented investors.

Key Decisions for Investors

• Value investors should consider prioritizing Cognizant (CTSH) over Epam (EPAM) due to its superior Zacks Rank, more attractive forward P/E, PEG, and P/B ratios, and higher Value Grade.
• For those holding Epam (EPAM), its 'Hold' rating and less compelling value metrics relative to CTSH warrant a review, particularly for portfolios with a strong value mandate.
• Investors should continue to monitor earnings estimate revisions for both companies, as these are key drivers for Zacks Ranks and can signal shifts in their relative attractiveness within the IT Services sector.