EPAM SYSTEMS INC (EPAM) Stock Fundamental Analysis
USA - NYSE:EPAM - US29414B1044 - Common Stock
155.08 USD
+10.08 (+6.95%)
155.08 USD
0 (0%)
EPAM gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 86 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 correct valuation and a medium growth rate.
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.
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
EPAM has a better Return On Assets (8.52%) than 80.23% of its industry peers.
The Return On Equity of EPAM (10.94%) is better than 67.44% of its industry peers.
With a decent Return On Invested Capital value of 10.85%, EPAM is doing good in the industry, outperforming 75.58% of the companies in the same industry.
EPAM had an Average Return On Invested Capital over the past 3 years of 11.98%. This is significantly below the industry average of 21.39%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.52% | ||
| ROE | 10.94% | ||
| 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
EPAM's Profit Margin of 7.91% is fine compared to the rest of the industry. EPAM outperforms 74.42% of its industry peers.
EPAM's Profit Margin has declined in the last couple of years.
EPAM has a Operating Margin of 10.91%. This is in the better half of the industry: EPAM outperforms 72.09% of its industry peers.
EPAM's Operating Margin has declined in the last couple of years.
EPAM has a Gross Margin of 30.05%. This is in the lower half of the industry: EPAM underperforms 61.63% of its industry peers.
EPAM's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.91% | ||
| PM (TTM) | 7.91% | ||
| GM | 30.05% |
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.
The number of shares outstanding for EPAM has been reduced compared to 1 year ago.
Compared to 5 years ago, EPAM has more shares outstanding
Compared to 1 year ago, EPAM has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 7.23 indicates that EPAM is not in any danger for bankruptcy at the moment.
The Altman-Z score of EPAM (7.23) is better than 86.05% of its industry peers.
The Debt to FCF ratio of EPAM is 0.06, which is an excellent value as it means it would take EPAM, only 0.06 years of fcf income to pay off all of its debts.
EPAM has a Debt to FCF ratio of 0.06. This is amongst the best in the industry. EPAM outperforms 93.02% 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.
EPAM's Debt to Equity ratio of 0.01 is amongst the best of the industry. EPAM outperforms 81.40% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.06 | ||
| Altman-Z | 7.23 |
ROIC/WACC1.2
WACC9.03%
2.3 Liquidity
A Current Ratio of 3.17 indicates that EPAM has no problem at all paying its short term obligations.
With an excellent Current ratio value of 3.17, EPAM belongs to the best of the industry, outperforming 80.23% of the companies in the same industry.
A Quick Ratio of 3.17 indicates that EPAM has no problem at all paying its short term obligations.
EPAM's Quick ratio of 3.17 is amongst the best of the industry. EPAM outperforms 81.40% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.17 | ||
| Quick Ratio | 3.17 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.22% over the past year.
The Earnings Per Share has been growing by 14.89% on average over the past years. This is quite good.
Looking at the last year, EPAM shows a quite strong growth in Revenue. The Revenue has grown by 9.73% 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)7.22%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%13.06%
Revenue 1Y (TTM)9.73%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%18.04%
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 8.94% on average per year.
The Revenue is expected to grow by 9.84% on average over the next years. This is quite good.
EPS Next Y3.9%
EPS Next 2Y7.04%
EPS Next 3Y8.45%
EPS Next 5Y8.94%
Revenue Next Year15.27%
Revenue Next 2Y11.11%
Revenue Next 3Y10.45%
Revenue Next 5Y9.84%
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
With a Price/Earnings ratio of 13.92, EPAM is valued correctly.
EPAM's Price/Earnings ratio is rather cheap when compared to the industry. EPAM is cheaper than 83.72% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.69. EPAM is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 12.45 indicates a correct valuation of EPAM.
EPAM's Price/Forward Earnings ratio is rather cheap when compared to the industry. EPAM is cheaper than 80.23% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.18. EPAM is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.92 | ||
| Fwd PE | 12.45 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EPAM is valued a bit cheaper than 72.09% of the companies in the same industry.
66.28% of the companies in the same industry are more expensive than EPAM, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.08 | ||
| EV/EBITDA | 10.66 |
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)3.57
PEG (5Y)0.93
EPS Next 2Y7.04%
EPS Next 3Y8.45%
5. Dividend
5.1 Amount
No dividends for EPAM!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
155.08
+10.08 (+6.95%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners96.48%
Inst Owner Change-1.16%
Ins Owners3.6%
Ins Owner Change0.11%
Market Cap8.64B
Analysts80.87
Price Target218.1 (40.64%)
Short Float %3.48%
Short Ratio2.23
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)4.02%
Min EPS beat(2)3.97%
Max EPS beat(2)4.07%
EPS beat(4)4
Avg EPS beat(4)5.61%
Min EPS beat(4)1.07%
Max EPS beat(4)13.33%
EPS beat(8)8
Avg EPS beat(8)5.66%
EPS beat(12)12
Avg EPS beat(12)7.23%
EPS beat(16)16
Avg EPS beat(16)10.93%
Revenue beat(2)0
Avg Revenue beat(2)-0.52%
Min Revenue beat(2)-0.56%
Max Revenue beat(2)-0.48%
Revenue beat(4)1
Avg Revenue beat(4)-0.21%
Min Revenue beat(4)-0.64%
Max Revenue beat(4)0.84%
Revenue beat(8)1
Avg Revenue beat(8)-0.68%
Revenue beat(12)2
Avg Revenue beat(12)-0.74%
Revenue beat(16)5
Avg Revenue beat(16)0.24%
PT rev (1m)0.46%
PT rev (3m)-1.39%
EPS NQ rev (1m)0.11%
EPS NQ rev (3m)4.15%
EPS NY rev (1m)0.02%
EPS NY rev (3m)2.11%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.82%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)1.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.92 | ||
| Fwd PE | 12.45 | ||
| P/S | 1.7 | ||
| P/FCF | 21.08 | ||
| P/OCF | 19.21 | ||
| P/B | 2.36 | ||
| P/tB | 4.27 | ||
| EV/EBITDA | 10.66 |
EPS(TTM)11.14
EY7.18%
EPS(NY)12.45
Fwd EY8.03%
FCF(TTM)7.36
FCFY4.74%
OCF(TTM)8.07
OCFY5.2%
SpS91.04
BVpS65.85
TBVpS36.31
PEG (NY)3.57
PEG (5Y)0.93
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.52% | ||
| ROE | 10.94% | ||
| ROCE | 13.96% | ||
| ROIC | 10.85% | ||
| ROICexc | 14.72% | ||
| ROICexgc | 33.69% | ||
| OM | 10.91% | ||
| PM (TTM) | 7.91% | ||
| GM | 30.05% | ||
| FCFM | 8.08% |
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 Turnover1.08
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.06 | ||
| Debt/EBITDA | 0.04 | ||
| Cap/Depr | 36.56% | ||
| Cap/Sales | 0.79% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 67.9% | ||
| Profit Quality | 102.14% | ||
| Current Ratio | 3.17 | ||
| Quick Ratio | 3.17 | ||
| Altman-Z | 7.23 |
F-Score6
WACC9.03%
ROIC/WACC1.2
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)7.22%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%13.06%
EPS Next Y3.9%
EPS Next 2Y7.04%
EPS Next 3Y8.45%
EPS Next 5Y8.94%
Revenue 1Y (TTM)9.73%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%18.04%
Revenue Next Year15.27%
Revenue Next 2Y11.11%
Revenue Next 3Y10.45%
Revenue Next 5Y9.84%
EBIT growth 1Y11.21%
EBIT growth 3Y0.14%
EBIT growth 5Y12.45%
EBIT Next Year16.3%
EBIT Next 3Y12.45%
EBIT Next 5Y11.07%
FCF growth 1Y-26.81%
FCF growth 3Y4.58%
FCF growth 5Y22.87%
OCF growth 1Y-26.87%
OCF growth 3Y-0.77%
OCF growth 5Y14.23%