EPAM SYSTEMS INC (EPAM) Stock Fundamental Analysis
NYSE:EPAM - New York Stock Exchange, Inc. - US29414B1044 - Common Stock - Currency: USD
Overall EPAM gets a fundamental rating of 6 out of 10. We evaluated EPAM against 82 industry peers in the IT Services industry. EPAM has an excellent financial health rating, but there are some minor concerns on its profitability. 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.
Each year in the past 5 years EPAM has been profitable.
EPAM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 9.57%, EPAM belongs to the top of the industry, outperforming 82.93% of the companies in the same industry.
With a decent Return On Equity value of 12.52%, EPAM is doing good in the industry, outperforming 69.51% of the companies in the same industry.
With a decent Return On Invested Capital value of 10.85%, EPAM is doing good in the industry, outperforming 74.39% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for EPAM is significantly below the industry average of 22.63%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.57% | ||
| ROE | 12.52% | ||
| ROIC | 10.85% |
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
With a decent Profit Margin value of 9.61%, EPAM is doing good in the industry, outperforming 75.61% of the companies in the same industry.
In the last couple of years the Profit Margin of EPAM has declined.
EPAM's Operating Margin of 11.60% is fine compared to the rest of the industry. EPAM outperforms 70.73% of its industry peers.
EPAM's Operating Margin has declined in the last couple of years.
EPAM has a Gross Margin (30.68%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of EPAM has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.6% | ||
| PM (TTM) | 9.61% | ||
| GM | 30.68% |
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
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.
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 8.01 indicates that EPAM is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 8.01, EPAM belongs to the best of the industry, outperforming 86.59% 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 better Debt to FCF ratio (0.05) than 92.68% of its industry peers.
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 85.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.05 | ||
| Altman-Z | 8.01 |
ROIC/WACC1.13
WACC9.64%
2.3 Liquidity
A Current Ratio of 2.96 indicates that EPAM has no problem at all paying its short term obligations.
The Current ratio of EPAM (2.96) is better than 84.15% of its industry peers.
EPAM has a Quick Ratio of 2.96. This indicates that EPAM is financially healthy and has no problem in meeting its short term obligations.
EPAM's Quick ratio of 2.96 is amongst the best of the industry. EPAM outperforms 84.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.96 | ||
| Quick Ratio | 2.96 |
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.
The Revenue has been growing slightly by 0.80% in the past year.
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)0.8%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%11.69%
3.2 Future
Based on estimates for the next years, EPAM will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.16% on average per year.
The Revenue is expected to grow by 8.24% on average over the next years. This is quite good.
EPS Next Y1.5%
EPS Next 2Y6.7%
EPS Next 3Y8.64%
EPS Next 5Y9.16%
Revenue Next Year13.71%
Revenue Next 2Y10.62%
Revenue Next 3Y10.46%
Revenue Next 5Y8.24%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue 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
A Price/Earnings ratio of 16.69 indicates a correct valuation of EPAM.
Based on the Price/Earnings ratio, EPAM is valued a bit cheaper than 70.73% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 25.91. EPAM is valued slightly cheaper when compared to this.
With a Price/Forward Earnings ratio of 14.60, EPAM is valued correctly.
Based on the Price/Forward Earnings ratio, EPAM is valued a bit cheaper than the industry average as 71.95% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of EPAM to the average of the S&P500 Index (21.85), we can say EPAM is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.69 | ||
| Fwd PE | 14.6 |
4.2 Price Multiples
67.07% of the companies in the same industry are more expensive than EPAM, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, EPAM is valued a bit cheaper than the industry average as 67.07% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.41 | ||
| EV/EBITDA | 14.05 |
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)11.13
PEG (5Y)1.12
EPS Next 2Y6.7%
EPS Next 3Y8.64%
5. Dividend
5.1 Amount
No dividends for EPAM!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
180.63
-2.97 (-1.62%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners94.26%
Inst Owner Change1.4%
Ins Owners3.34%
Ins Owner Change1.07%
Market Cap10.23B
Analysts76.43
Price Target220.4 (22.02%)
Short Float %3.34%
Short Ratio2.37
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)7.2%
Min EPS beat(2)1.07%
Max EPS beat(2)13.33%
EPS beat(4)4
Avg EPS beat(4)6.21%
Min EPS beat(4)1.07%
Max EPS beat(4)13.33%
EPS beat(8)8
Avg EPS beat(8)6.42%
EPS beat(12)12
Avg EPS beat(12)12.7%
EPS beat(16)16
Avg EPS beat(16)11%
Revenue beat(2)1
Avg Revenue beat(2)0.1%
Min Revenue beat(2)-0.64%
Max Revenue beat(2)0.84%
Revenue beat(4)1
Avg Revenue beat(4)-0.71%
Min Revenue beat(4)-1.65%
Max Revenue beat(4)0.84%
Revenue beat(8)1
Avg Revenue beat(8)-0.89%
Revenue beat(12)4
Avg Revenue beat(12)0.39%
Revenue beat(16)7
Avg Revenue beat(16)0.34%
PT rev (1m)-15.86%
PT rev (3m)-17.74%
EPS NQ rev (1m)0.03%
EPS NQ rev (3m)-12.4%
EPS NY rev (1m)2.69%
EPS NY rev (3m)-4.53%
Revenue NQ rev (1m)0.08%
Revenue NQ rev (3m)1.32%
Revenue NY rev (1m)0.76%
Revenue NY rev (3m)2.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.69 | ||
| Fwd PE | 14.6 | ||
| P/S | 2.16 | ||
| P/FCF | 19.41 | ||
| P/OCF | 18.29 | ||
| P/B | 2.82 | ||
| P/tB | 5.09 | ||
| EV/EBITDA | 14.05 |
EPS(TTM)10.82
EY5.99%
EPS(NY)12.37
Fwd EY6.85%
FCF(TTM)9.31
FCFY5.15%
OCF(TTM)9.87
OCFY5.47%
SpS83.49
BVpS64.09
TBVpS35.52
PEG (NY)11.13
PEG (5Y)1.12
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.57% | ||
| ROE | 12.52% | ||
| ROCE | 13.96% | ||
| ROIC | 10.85% | ||
| ROICexc | 16.15% | ||
| ROICexgc | 41.67% | ||
| OM | 11.6% | ||
| PM (TTM) | 9.61% | ||
| GM | 30.68% | ||
| FCFM | 11.15% |
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-Score6
Asset Turnover1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.05 | ||
| Debt/EBITDA | 0.04 | ||
| Cap/Depr | 35.89% | ||
| Cap/Sales | 0.68% | ||
| Interest Coverage | 146.74 | ||
| Cash Conversion | 87.64% | ||
| Profit Quality | 115.95% | ||
| Current Ratio | 2.96 | ||
| Quick Ratio | 2.96 | ||
| Altman-Z | 8.01 |
F-Score6
WACC9.64%
ROIC/WACC1.13
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 Y1.5%
EPS Next 2Y6.7%
EPS Next 3Y8.64%
EPS Next 5Y9.16%
Revenue 1Y (TTM)0.8%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%11.69%
Revenue Next Year13.71%
Revenue Next 2Y10.62%
Revenue Next 3Y10.46%
Revenue Next 5Y8.24%
EBIT growth 1Y4.06%
EBIT growth 3Y0.14%
EBIT growth 5Y12.45%
EBIT Next Year14.35%
EBIT Next 3Y13.73%
EBIT Next 5Y11.07%
FCF growth 1Y-1.35%
FCF growth 3Y4.58%
FCF growth 5Y22.87%
OCF growth 1Y-0.62%
OCF growth 3Y-0.77%
OCF growth 5Y14.23%