Overall EPAM gets a fundamental rating of 5 out of 10. We evaluated EPAM against 88 industry peers in the IT Services industry. While EPAM has a great health rating, its profitability is only average at the moment. EPAM is valied quite expensively at the moment, while it does show a decent growth rate.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

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.
EPAM had positive earnings in each of the past 5 years.
EPAM had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

With a decent Return On Assets value of 7.67%, EPAM is doing good in the industry, outperforming 77.27% of the companies in the same industry.
Looking at the Return On Equity, with a value of 9.97%, EPAM is in the better half of the industry, outperforming 65.91% of the companies in the same industry.
With a decent Return On Invested Capital value of 10.71%, EPAM is doing good in the industry, outperforming 78.41% of the companies in the same industry.
EPAM had an Average Return On Invested Capital over the past 3 years of 11.99%. This is significantly below the industry average of 29.06%.

		Industry Rank	Sector Rank
ROA	7.67%
ROE	9.97%
ROIC	10.72%

ROA(3y)9.87%

ROA(5y)11.06%

ROE(3y)12.84%

ROE(5y)14.88%

ROIC(3y)11.99%

ROIC(5y)12.85%

1.3 Margins

With a decent Profit Margin value of 7.01%, EPAM is doing good in the industry, outperforming 69.32% of the companies in the same industry.
EPAM's Profit Margin has declined in the last couple of years.
EPAM's Operating Margin of 10.43% is fine compared to the rest of the industry. EPAM outperforms 71.59% of its industry peers.
In the last couple of years the Operating Margin of EPAM has declined.
EPAM has a Gross Margin of 28.92%. This is in the lower half of the industry: EPAM underperforms 62.50% of its industry peers.
In the last couple of years the Gross Margin of EPAM has declined.

		Industry Rank	Sector Rank
OM	10.43%
PM (TTM)	7.01%
GM	28.92%

OM growth 3Y-7.14%

OM growth 5Y-2.63%

PM growth 3Y-9.14%

PM growth 5Y-3.32%

GM growth 3Y-3.28%

GM growth 5Y-2.67%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), EPAM 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.
Compared to 1 year ago, EPAM has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 9.05 indicates that EPAM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 9.05, EPAM belongs to the top of the industry, outperforming 89.77% of the companies in the same industry.
EPAM has a debt to FCF ratio of 0.05. This is a very positive value and a sign of high solvency as it would only need 0.05 years to pay back of all of its debts.
EPAM's Debt to FCF ratio of 0.05 is amongst the best of the industry. EPAM outperforms 92.05% of its industry peers.
A Debt/Equity ratio of 0.01 indicates that EPAM is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.01, EPAM belongs to the top of the industry, outperforming 82.95% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.01
Debt/FCF	0.05
Altman-Z	9.05

ROIC/WACC1.15

WACC9.29%

2.3 Liquidity

EPAM has a Current Ratio of 3.02. This indicates that EPAM is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 3.02, EPAM is doing good in the industry, outperforming 78.41% of the companies in the same industry.
EPAM has a Quick Ratio of 3.02. This indicates that EPAM is financially healthy and has no problem in meeting its short term obligations.
EPAM has a Quick ratio of 3.02. This is in the better half of the industry: EPAM outperforms 78.41% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	3.02
Quick Ratio	3.02

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 2.97% 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.
Looking at the last year, EPAM shows a quite strong growth in Revenue. The Revenue has grown by 14.26% in the last year.
The Revenue has been growing by 15.56% on average over the past years. This is quite good.

EPS 1Y (TTM)2.97%

EPS 3Y6.34%

EPS 5Y14.89%

EPS Q2Q%-1.28%

Revenue 1Y (TTM)14.26%

Revenue growth 3Y7.95%

Revenue growth 5Y15.56%

Sales Q2Q%19.43%

3.2 Future

The Earnings Per Share is expected to grow by 5.17% on average over the next years.
Based on estimates for the next years, EPAM will show a small growth in Revenue. The Revenue will grow by 7.81% on average per year.

EPS Next Y7.3%

EPS Next 2Y8.24%

EPS Next 3Y9.28%

EPS Next 5Y5.17%

Revenue Next Year15.96%

Revenue Next 2Y11.41%

Revenue Next 3Y10.53%

Revenue Next 5Y7.81%

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.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 19.86, the valuation of EPAM can be described as rather expensive.
Based on the Price/Earnings ratio, EPAM is valued a bit cheaper than 67.05% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.25, EPAM is valued a bit cheaper.
With a Price/Forward Earnings ratio of 17.31, EPAM is valued on the expensive side.
EPAM's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. EPAM is cheaper than 68.18% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of EPAM to the average of the S&P500 Index (25.98), we can say EPAM is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	19.86
Fwd PE	17.31

4.2 Price Multiples

EPAM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. EPAM is cheaper than 65.91% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of EPAM is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	26.52
EV/EBITDA	16.81

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

PEG (NY)2.72

PEG (5Y)1.33

EPS Next 2Y8.24%

EPS Next 3Y9.28%

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5. Dividend

5.1 Amount

EPAM does not give a dividend.

		Industry Rank	Sector Rank
Dividend Yield	0%

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EPAM SYSTEMS INC / EPAM FAQ

What is the fundamental rating for EPAM stock?

ChartMill assigns a fundamental rating of 5 / 10 to EPAM.

What is the valuation status for EPAM stock?

ChartMill assigns a valuation rating of 3 / 10 to EPAM SYSTEMS INC (EPAM). This can be considered as Overvalued.

What is the profitability of EPAM stock?

EPAM SYSTEMS INC (EPAM) has a profitability rating of 5 / 10.

What is the valuation of EPAM SYSTEMS INC based on its PE and PB ratios?

The Price/Earnings (PE) ratio for EPAM SYSTEMS INC (EPAM) is 19.86 and the Price/Book (PB) ratio is 3.27.