EPAM SYSTEMS INC (EPAM) Stock Fundamental Analysis
NYSE:EPAM - New York Stock Exchange, Inc. - US29414B1044 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to EPAM. EPAM was compared to 82 industry peers in the IT Services industry. EPAM is in great health and has no worries on liquidiy or solvency at all, but the profibility rating is only average. EPAM has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
EPAM had positive earnings in the past year.
EPAM had a positive operating cash flow in the past year.
EPAM had positive earnings in each of the past 5 years.
Each year in the past 5 years EPAM had a positive operating cash flow.
1.2 Ratios
EPAM has a Return On Assets of 8.72%. This is in the better half of the industry: EPAM outperforms 78.05% of its industry peers.
The Return On Equity of EPAM (11.30%) is better than 65.85% of its industry peers.
The Return On Invested Capital of EPAM (10.61%) is better than 73.17% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for EPAM is significantly below the industry average of 21.64%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 11.3% | ||
| ROIC | 10.61% |
ROA(3y)9.87%
ROA(5y)11.06%
ROE(3y)12.84%
ROE(5y)14.88%
ROIC(3y)11.98%
ROIC(5y)12.84%
1.3 Margins
EPAM has a Profit Margin of 8.47%. This is in the better half of the industry: EPAM outperforms 75.61% of its industry peers.
EPAM's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 11.03%, EPAM is in the better half of the industry, outperforming 69.51% of the companies in the same industry.
In the last couple of years the Operating Margin of EPAM has declined.
Looking at the Gross Margin, with a value of 30.20%, EPAM is doing worse than 62.20% of the companies in the same industry.
EPAM's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.03% | ||
| PM (TTM) | 8.47% | ||
| GM | 30.2% |
OM growth 3Y-7.24%
OM growth 5Y-2.7%
PM growth 3Y-9.14%
PM growth 5Y-3.32%
GM growth 3Y-3.28%
GM growth 5Y-2.67%
2. Health
2.1 Basic Checks
EPAM has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, EPAM has less shares outstanding
The number of shares outstanding for EPAM has been increased compared to 5 years ago.
The debt/assets ratio for EPAM has been reduced compared to a year ago.
2.2 Solvency
EPAM has an Altman-Z score of 8.14. This indicates that EPAM is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 8.14, EPAM belongs to the best of the industry, outperforming 84.15% of the companies in the same industry.
EPAM has a debt to FCF ratio of 0.06. This is a very positive value and a sign of high solvency as it would only need 0.06 years to pay back of all of its debts.
EPAM has a better Debt to FCF ratio (0.06) than 96.34% of its industry peers.
A Debt/Equity ratio of 0.01 indicates that EPAM is not too dependend on debt financing.
The Debt to Equity ratio of EPAM (0.01) is better than 84.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.06 | ||
| Altman-Z | 8.14 |
ROIC/WACC1.11
WACC9.58%
2.3 Liquidity
EPAM has a Current Ratio of 3.06. This indicates that EPAM is financially healthy and has no problem in meeting its short term obligations.
EPAM's Current ratio of 3.06 is amongst the best of the industry. EPAM outperforms 82.93% of its industry peers.
A Quick Ratio of 3.06 indicates that EPAM has no problem at all paying its short term obligations.
With an excellent Quick ratio value of 3.06, EPAM belongs to the best of the industry, outperforming 82.93% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.06 | ||
| Quick Ratio | 3.06 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.27% over the past year.
EPAM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 14.89% yearly.
EPAM shows a small growth in Revenue. In the last year, the Revenue has grown by 4.72%.
The Revenue has been growing by 15.56% on average over the past years. This is quite good.
EPS 1Y (TTM)2.27%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%-2.03%
Revenue 1Y (TTM)4.72%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%11.69%
3.2 Future
EPAM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.60% yearly.
EPAM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.01% yearly.
EPS Next Y1.7%
EPS Next 2Y6.43%
EPS Next 3Y8.23%
EPS Next 5Y8.6%
Revenue Next Year14.04%
Revenue Next 2Y10.66%
Revenue Next 3Y10.39%
Revenue Next 5Y8.01%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 15.70, which indicates a correct valuation of EPAM.
Based on the Price/Earnings ratio, EPAM is valued a bit cheaper than the industry average as 73.17% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 27.47. EPAM is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 13.80, the valuation of EPAM can be described as correct.
EPAM's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. EPAM is cheaper than 75.61% of the companies in the same industry.
EPAM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.91, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.7 | ||
| Fwd PE | 13.8 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EPAM is valued a bit cheaper than the industry average as 68.29% of the companies are valued more expensively.
The rest of the industry has a similar Price/Free Cash Flow ratio as EPAM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.99 | ||
| EV/EBITDA | 14.04 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates EPAM does not grow enough to justify the current Price/Earnings ratio.
PEG (NY)9.22
PEG (5Y)1.05
EPS Next 2Y6.43%
EPS Next 3Y8.23%
5. Dividend
5.1 Amount
EPAM does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
169.88
-7.87 (-4.43%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners94.99%
Inst Owner Change-0.01%
Ins Owners3.54%
Ins Owner Change1.93%
Market Cap9.62B
Analysts79.2
Price Target223.34 (31.47%)
Short Float %2.89%
Short Ratio1.91
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.52%
Min EPS beat(2)1.07%
Max EPS beat(2)3.97%
EPS beat(4)4
Avg EPS beat(4)6.18%
Min EPS beat(4)1.07%
Max EPS beat(4)13.33%
EPS beat(8)8
Avg EPS beat(8)6.49%
EPS beat(12)12
Avg EPS beat(12)9.86%
EPS beat(16)16
Avg EPS beat(16)10.91%
Revenue beat(2)1
Avg Revenue beat(2)0.14%
Min Revenue beat(2)-0.56%
Max Revenue beat(2)0.84%
Revenue beat(4)1
Avg Revenue beat(4)-0.44%
Min Revenue beat(4)-1.41%
Max Revenue beat(4)0.84%
Revenue beat(8)1
Avg Revenue beat(8)-0.76%
Revenue beat(12)3
Avg Revenue beat(12)-0.34%
Revenue beat(16)6
Avg Revenue beat(16)0.3%
PT rev (1m)1.34%
PT rev (3m)-14.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.14%
EPS NY rev (1m)0.2%
EPS NY rev (3m)1.74%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.1%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)0.79%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.7 | ||
| Fwd PE | 13.8 | ||
| P/S | 1.98 | ||
| P/FCF | 22.99 | ||
| P/OCF | 21.23 | ||
| P/B | 2.64 | ||
| P/tB | 4.74 | ||
| EV/EBITDA | 14.04 |
EPS(TTM)10.82
EY6.37%
EPS(NY)12.31
Fwd EY7.25%
FCF(TTM)7.39
FCFY4.35%
OCF(TTM)8
OCFY4.71%
SpS85.86
BVpS64.3
TBVpS35.81
PEG (NY)9.22
PEG (5Y)1.05
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 11.3% | ||
| ROCE | 13.64% | ||
| ROIC | 10.61% | ||
| ROICexc | 15.11% | ||
| ROICexgc | 36.37% | ||
| OM | 11.03% | ||
| PM (TTM) | 8.47% | ||
| GM | 30.2% | ||
| FCFM | 8.61% |
ROA(3y)9.87%
ROA(5y)11.06%
ROE(3y)12.84%
ROE(5y)14.88%
ROIC(3y)11.98%
ROIC(5y)12.84%
ROICexc(3y)23.91%
ROICexc(5y)27.45%
ROICexgc(3y)44.54%
ROICexgc(5y)48.5%
ROCE(3y)15.42%
ROCE(5y)16.54%
ROICexcg growth 3Y-11.88%
ROICexcg growth 5Y3.29%
ROICexc growth 3Y-20.35%
ROICexc growth 5Y-8.92%
OM growth 3Y-7.24%
OM growth 5Y-2.7%
PM growth 3Y-9.14%
PM growth 5Y-3.32%
GM growth 3Y-3.28%
GM growth 5Y-2.67%
F-Score5
Asset Turnover1.03
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.06 | ||
| Debt/EBITDA | 0.04 | ||
| Cap/Depr | 35.13% | ||
| Cap/Sales | 0.71% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 71.35% | ||
| Profit Quality | 101.68% | ||
| Current Ratio | 3.06 | ||
| Quick Ratio | 3.06 | ||
| Altman-Z | 8.14 |
F-Score5
WACC9.58%
ROIC/WACC1.11
Cap/Depr(3y)51.75%
Cap/Depr(5y)79.67%
Cap/Sales(3y)0.99%
Cap/Sales(5y)1.71%
Profit Quality(3y)111.75%
Profit Quality(5y)115.25%
High Growth Momentum
Growth
EPS 1Y (TTM)2.27%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%-2.03%
EPS Next Y1.7%
EPS Next 2Y6.43%
EPS Next 3Y8.23%
EPS Next 5Y8.6%
Revenue 1Y (TTM)4.72%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%11.69%
Revenue Next Year14.04%
Revenue Next 2Y10.66%
Revenue Next 3Y10.39%
Revenue Next 5Y8.01%
EBIT growth 1Y3.23%
EBIT growth 3Y0.14%
EBIT growth 5Y12.45%
EBIT Next Year14.2%
EBIT Next 3Y13.1%
EBIT Next 5Y11.07%
FCF growth 1Y-22.03%
FCF growth 3Y4.58%
FCF growth 5Y22.87%
OCF growth 1Y-24.83%
OCF growth 3Y-0.77%
OCF growth 5Y14.23%