ACN Vs. IT: Which Stock Is The Better Value Option?

Investors looking for stocks in the Consulting Services sector might want to consider either Accenture (NYSE:ACN) or 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Accenture and Gartner are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ACN is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

ACN currently has a forward P/E ratio of 24.40, while IT has a forward P/E of 39.06. We also note that ACN has a PEG ratio of 2.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IT currently has a PEG ratio of 2.75.

Another notable valuation metric for ACN is its P/B ratio of 8.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IT has a P/B of 16.35.

These are just a few of the metrics contributing to ACN's Value grade of B and IT's Value grade of F.

ACN has seen stronger estimate revision activity and sports more attractive valuation metrics than IT, so it seems like value investors will conclude that ACN is the superior option right now.