Overall EPAM gets a fundamental rating of 5 out of 10. We evaluated EPAM against 88 industry peers in the IT Services industry. EPAM has an excellent financial health rating, but there are some minor concerns on its profitability. EPAM is quite expensive at the moment. 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

In the past year EPAM was profitable.
In the past year EPAM had a positive cash flow from operations.
In the past 5 years EPAM has always been profitable.
In the past 5 years EPAM always reported a positive cash flow from operatings.

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.
Looking at the Return On Invested Capital, with a value of 10.71%, EPAM is in the better half of 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

The Profit Margin of EPAM (7.01%) is better than 69.32% of its industry peers.
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.
EPAM's Operating Margin has declined in the last couple of years.
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.
EPAM's Gross Margin has declined in the last couple of years.

		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.
EPAM has less shares outstanding than it did 1 year ago.
EPAM has more shares outstanding than it did 5 years ago.
EPAM has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 9.05 indicates that EPAM is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 9.05, EPAM belongs to the best of the industry, outperforming 89.77% of the companies in the same industry.
The Debt to FCF ratio of EPAM is 0.05, which is an excellent value as it means it would take EPAM, only 0.05 years of fcf income to pay off all of its debts.
EPAM has a Debt to FCF ratio of 0.05. This is amongst the best in the industry. EPAM outperforms 92.05% of its industry peers.
EPAM has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of EPAM (0.01) is better than 82.95% of its industry peers.

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

ROIC/WACC1.16

WACC9.2%

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.
Looking at the Current ratio, with a value of 3.02, EPAM is in the better half of 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.
Looking at the Quick ratio, with a value of 3.02, EPAM is in the better half of the industry, outperforming 78.41% of the companies in the same industry.

		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

EPAM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.97%.
EPAM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 14.89% yearly.
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

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

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

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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

A Price/Earnings ratio of 19.64 indicates a rather expensive valuation of EPAM.
Compared to the rest of the industry, the Price/Earnings ratio of EPAM indicates a somewhat cheap valuation: EPAM is cheaper than 67.05% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.82. EPAM is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 17.12, the valuation of EPAM can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of EPAM indicates a somewhat cheap valuation: EPAM is cheaper than 68.18% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.95. EPAM is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	19.64
Fwd PE	17.12

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.
EPAM's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	26.23
EV/EBITDA	16.79

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.