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SAIC vs. CSGP: Which Stock Is the Better Value Option?

Zacks

Investors interested in Computers – IT Services stocks are likely familiar with SAIC (SAIC) and CoStar Group (CSGP). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, SAIC is sporting a Zacks Rank of #2 (Buy), while CoStar Group has a Zacks Rank of #3 (Hold). This means that SAIC’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

SAIC currently has a forward P/E ratio of 15.49, while CSGP has a forward P/E of 51.73. We also note that SAIC has a PEG ratio of 2.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. CSGP currently has a PEG ratio of 3.09.

Another notable valuation metric for SAIC is its P/B ratio of 3.13. 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, CSGP has a P/B of 6.06.

These metrics, and several others, help SAIC earn a Value grade of B, while CSGP has been given a Value grade of F.

SAIC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SAIC is likely the superior value option right now.


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Zacks Investment Research
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