Investors with an interest in Computers - IT Services stocks have likely encountered both Endava PLC Sponsored ADR (DAVA) and Epam (EPAM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, Endava PLC Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while Epam has a Zacks Rank of #4 (Sell). This means that DAVA'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DAVA currently has a forward P/E ratio of 11.48, while EPAM has a forward P/E of 13.84. We also note that DAVA has a PEG ratio of 0.52. 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. EPAM currently has a PEG ratio of 2.

Another notable valuation metric for DAVA is its P/B ratio of 1.20. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EPAM has a P/B of 2.27.

These metrics, and several others, help DAVA earn a Value grade of B, while EPAM has been given a Value grade of C.

DAVA 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 DAVA is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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