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 5 out of 10 to EPAM. EPAM was compared to 82 industry peers in the IT Services industry. While EPAM has a great health rating, its profitability is only average at the moment. EPAM has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
EPAM had positive earnings in the past year.
In the past year EPAM had a positive cash flow from operations.
Of the past 5 years EPAM 4 years were profitable.
Of the past 5 years EPAM 4 years had a positive operating cash flow.
1.2 Ratios
EPAM has a better Return On Assets (10.07%) than 83.33% of its industry peers.
The Return On Equity of EPAM (12.63%) is better than 71.79% of its industry peers.
EPAM has a Return On Invested Capital of 11.35%. This is in the better half of the industry: EPAM outperforms 78.21% of its industry peers.
EPAM had an Average Return On Invested Capital over the past 3 years of 13.88%. This is above the industry average of 10.13%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.07% | ||
| ROE | 12.63% | ||
| ROIC | 11.35% |
ROA(3y)11.24%
ROA(5y)11.47%
ROE(3y)15.12%
ROE(5y)15.64%
ROIC(3y)13.88%
ROIC(5y)13.64%
1.3 Margins
EPAM has a better Profit Margin (9.68%) than 74.36% of its industry peers.
EPAM's Profit Margin has declined in the last couple of years.
With a decent Operating Margin value of 11.53%, EPAM is doing good in the industry, outperforming 73.08% of the companies in the same industry.
EPAM's Operating Margin has declined in the last couple of years.
EPAM's Gross Margin of 30.84% is in line compared to the rest of the industry. EPAM outperforms 43.59% of its industry peers.
EPAM's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.53% | ||
| PM (TTM) | 9.68% | ||
| GM | 30.84% |
OM growth 3Y-7.63%
OM growth 5Y-3.37%
PM growth 3Y-10.26%
PM growth 5Y-7.37%
GM growth 3Y-4.28%
GM growth 5Y-3%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so EPAM is still creating some value.
EPAM has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
EPAM has an Altman-Z score of 11.34. This indicates that EPAM is financially healthy and has little risk of bankruptcy at the moment.
EPAM has a Altman-Z score of 11.34. This is amongst the best in the industry. EPAM outperforms 93.59% of its industry peers.
The Debt to FCF ratio of EPAM is 0.04, which is an excellent value as it means it would take EPAM, only 0.04 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.04, EPAM belongs to the top of the industry, outperforming 93.59% of the companies in the same industry.
A Debt/Equity ratio of 0.01 indicates that EPAM is not too dependend on debt financing.
EPAM has a Debt to Equity ratio of 0.01. This is amongst the best in the industry. EPAM outperforms 84.62% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Altman-Z | 11.34 |
ROIC/WACC1.06
WACC10.71%
2.3 Liquidity
A Current Ratio of 4.56 indicates that EPAM has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 4.56, EPAM belongs to the top of the industry, outperforming 94.87% of the companies in the same industry.
A Quick Ratio of 4.56 indicates that EPAM has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 4.56, EPAM belongs to the top of the industry, outperforming 94.87% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.56 | ||
| Quick Ratio | 4.56 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.64% over the past year.
Measured over the past years, EPAM shows a quite strong growth in Earnings Per Share. The EPS has been growing by 14.89% on average per year.
EPS 1Y (TTM)2.64%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%3.27%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%7.87%
3.2 Future
The Earnings Per Share is expected to grow by 9.87% on average over the next years. This is quite good.
The Revenue is expected to grow by 9.89% on average over the next years. This is quite good.
EPS Next Y6.25%
EPS Next 2Y8.87%
EPS Next 3Y13.31%
EPS Next 5Y9.87%
Revenue Next Year11.45%
Revenue Next 2Y10.44%
Revenue Next 3Y9.51%
Revenue Next 5Y9.89%
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.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 19.21, the valuation of EPAM can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of EPAM indicates a somewhat cheap valuation: EPAM is cheaper than 74.36% of the companies listed in the same industry.
EPAM is valuated rather cheaply when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 18.08 indicates a rather expensive valuation of EPAM.
73.08% of the companies in the same industry are more expensive than EPAM, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.68. EPAM is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.21 | ||
| Fwd PE | 18.08 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EPAM is valued a bit cheaper than 66.67% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, EPAM is valued a bit cheaper than 69.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.64 | ||
| EV/EBITDA | 17.26 |
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.
EPAM's earnings are expected to grow with 13.31% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.07
PEG (5Y)1.29
EPS Next 2Y8.87%
EPS Next 3Y13.31%
5. Dividend
5.1 Amount
No dividends for EPAM!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
208.84
-16.23 (-7.21%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners91.12%
Inst Owner Change-1.41%
Ins Owners3.38%
Ins Owner Change-0.65%
Market Cap11.85B
Analysts77.14
Price Target272.69 (30.57%)
Short Float %1.42%
Short Ratio1.3
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)9.84%
Min EPS beat(2)6.34%
Max EPS beat(2)13.33%
EPS beat(4)4
Avg EPS beat(4)7.91%
Min EPS beat(4)4.1%
Max EPS beat(4)13.33%
EPS beat(8)8
Avg EPS beat(8)7.19%
EPS beat(12)12
Avg EPS beat(12)13.25%
EPS beat(16)16
Avg EPS beat(16)11.15%
Revenue beat(2)0
Avg Revenue beat(2)-1.02%
Min Revenue beat(2)-1.41%
Max Revenue beat(2)-0.64%
Revenue beat(4)0
Avg Revenue beat(4)-0.96%
Min Revenue beat(4)-1.65%
Max Revenue beat(4)-0.15%
Revenue beat(8)0
Avg Revenue beat(8)-1.22%
Revenue beat(12)3
Avg Revenue beat(12)0.3%
Revenue beat(16)7
Avg Revenue beat(16)0.33%
PT rev (1m)1.12%
PT rev (3m)18.45%
EPS NQ rev (1m)0.17%
EPS NQ rev (3m)0.89%
EPS NY rev (1m)0.29%
EPS NY rev (3m)2.86%
Revenue NQ rev (1m)0.24%
Revenue NQ rev (3m)2.06%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)0.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.21 | ||
| Fwd PE | 18.08 | ||
| P/S | 2.55 | ||
| P/FCF | 20.64 | ||
| P/OCF | 19.73 | ||
| P/B | 3.33 | ||
| P/tB | 4.15 | ||
| EV/EBITDA | 17.26 |
EPS(TTM)10.87
EY5.2%
EPS(NY)11.55
Fwd EY5.53%
FCF(TTM)10.12
FCFY4.84%
OCF(TTM)10.58
OCFY5.07%
SpS81.75
BVpS62.66
TBVpS50.38
PEG (NY)3.07
PEG (5Y)1.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.07% | ||
| ROE | 12.63% | ||
| ROCE | 14.15% | ||
| ROIC | 11.35% | ||
| ROICexc | 24.96% | ||
| ROICexgc | 41.99% | ||
| OM | 11.53% | ||
| PM (TTM) | 9.68% | ||
| GM | 30.84% | ||
| FCFM | 12.38% |
ROA(3y)11.24%
ROA(5y)11.47%
ROE(3y)15.12%
ROE(5y)15.64%
ROIC(3y)13.88%
ROIC(5y)13.64%
ROICexc(3y)30.06%
ROICexc(5y)30.28%
ROICexgc(3y)52.51%
ROICexgc(5y)48.75%
ROCE(3y)17.35%
ROCE(5y)17.03%
ROICexcg growth 3Y-4.66%
ROICexcg growth 5Y-4.89%
ROICexc growth 3Y-9%
ROICexc growth 5Y-5.09%
OM growth 3Y-7.63%
OM growth 5Y-3.37%
PM growth 3Y-10.26%
PM growth 5Y-7.37%
GM growth 3Y-4.28%
GM growth 5Y-3%
F-Score5
Asset Turnover1.04
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.04 | ||
| Debt/EBITDA | 0.04 | ||
| Cap/Depr | 30.66% | ||
| Cap/Sales | 0.57% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 96.71% | ||
| Profit Quality | 127.86% | ||
| Current Ratio | 4.56 | ||
| Quick Ratio | 4.56 | ||
| Altman-Z | 11.34 |
F-Score5
WACC10.71%
ROIC/WACC1.06
Cap/Depr(3y)84.35%
Cap/Depr(5y)116.33%
Cap/Sales(3y)1.75%
Cap/Sales(5y)2.44%
Profit Quality(3y)104.98%
Profit Quality(5y)106.48%
High Growth Momentum
Growth
EPS 1Y (TTM)2.64%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%3.27%
EPS Next Y6.25%
EPS Next 2Y8.87%
EPS Next 3Y13.31%
EPS Next 5Y9.87%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%7.87%
Revenue Next Year11.45%
Revenue Next 2Y10.44%
Revenue Next 3Y9.51%
Revenue Next 5Y9.89%
EBIT growth 1Y-7.06%
EBIT growth 3Y11.6%
EBIT growth 5Y16.49%
EBIT Next Year15.91%
EBIT Next 3Y11.14%
EBIT Next 5Y10.52%
FCF growth 1Y28.69%
FCF growth 3Y3.95%
FCF growth 5Y15.98%
OCF growth 1Y6.69%
OCF growth 3Y1.1%
OCF growth 5Y14%