EPAM SYSTEMS INC (EPAM) Stock Fundamental Analysis
NYSE:EPAM - New York Stock Exchange, Inc. - US29414B1044 - Common Stock - Currency: USD
EPAM gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 82 industry peers in the IT Services industry. EPAM is in great health and has no worries on liquidiy or solvency at all, but the profibility rating is only average. EPAM has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year EPAM was profitable.
EPAM had a positive operating cash flow in the past year.
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
Looking at the Return On Assets, with a value of 9.57%, EPAM belongs to the top of the industry, outperforming 81.71% of the companies in the same industry.
Looking at the Return On Equity, with a value of 12.52%, EPAM is in the better half of the industry, outperforming 69.51% of the companies in the same industry.
The Return On Invested Capital of EPAM (10.85%) is better than 74.39% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for EPAM is significantly below the industry average of 22.65%.
| 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
The Profit Margin of EPAM (9.61%) is better than 74.39% of its industry peers.
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.
In the last couple of years the Operating Margin of EPAM has declined.
With a Gross Margin value of 30.68%, EPAM perfoms like the industry average, outperforming 41.46% of the companies in the same 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.
The number of shares outstanding for EPAM has been reduced compared to 1 year ago.
The number of shares outstanding for EPAM has been increased compared to 5 years ago.
EPAM has a better debt/assets ratio than last year.
2.2 Solvency
EPAM has an Altman-Z score of 7.34. This indicates that EPAM is financially healthy and has little risk of bankruptcy at the moment.
EPAM has a better Altman-Z score (7.34) than 86.59% of its industry peers.
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.
The Debt to FCF ratio of EPAM (0.05) is better than 93.90% of its industry peers.
A Debt/Equity ratio of 0.01 indicates that EPAM is not too dependend on debt financing.
EPAM has a better Debt to Equity ratio (0.01) than 85.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.05 | ||
| Altman-Z | 7.34 |
ROIC/WACC1.21
WACC8.98%
2.3 Liquidity
EPAM has a Current Ratio of 2.96. This indicates that EPAM is financially healthy and has no problem in meeting 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
EPAM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.64%.
The Earnings Per Share has been growing by 14.89% on average over the past years. This is quite good.
EPAM shows a small growth in Revenue. In the last year, the Revenue has grown by 0.80%.
The Revenue has been growing by 15.56% on average over the past years. This is quite good.
EPS 1Y (TTM)2.64%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%3.27%
Revenue 1Y (TTM)0.8%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%7.87%
3.2 Future
The Earnings Per Share is expected to grow by 9.16% on average over the next years. This is quite good.
The Revenue is expected to grow by 8.24% on average over the next years. This is quite good.
EPS Next Y-1.16%
EPS Next 2Y6%
EPS Next 3Y8.39%
EPS Next 5Y9.16%
Revenue Next Year12.43%
Revenue Next 2Y10.42%
Revenue Next 3Y10.5%
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.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 14.75, the valuation of EPAM can be described as correct.
75.61% of the companies in the same industry are more expensive than EPAM, based on the Price/Earnings ratio.
EPAM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.22.
With a Price/Forward Earnings ratio of 14.93, EPAM is valued correctly.
75.61% 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 20.86. EPAM is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.75 | ||
| Fwd PE | 14.93 |
4.2 Price Multiples
EPAM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. EPAM is cheaper than 69.51% of the companies in the same industry.
EPAM's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. EPAM is cheaper than 75.61% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.23 | ||
| EV/EBITDA | 12.08 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)0.99
EPS Next 2Y6%
EPS Next 3Y8.39%
5. Dividend
5.1 Amount
No dividends for EPAM!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
160.36
+1.9 (+1.2%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners94.26%
Inst Owner Change-0.42%
Ins Owners3.34%
Ins Owner Change1.05%
Market Cap9.08B
Analysts77.14
Price Target240.17 (49.77%)
Short Float %3.02%
Short Ratio2.03
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)-8.92%
PT rev (3m)-9.36%
EPS NQ rev (1m)-0.65%
EPS NQ rev (3m)-12.13%
EPS NY rev (1m)-1.12%
EPS NY rev (3m)-6.73%
Revenue NQ rev (1m)-0.15%
Revenue NQ rev (3m)2.03%
Revenue NY rev (1m)-0.7%
Revenue NY rev (3m)1.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.75 | ||
| Fwd PE | 14.93 | ||
| P/S | 1.92 | ||
| P/FCF | 17.23 | ||
| P/OCF | 16.24 | ||
| P/B | 2.5 | ||
| P/tB | 4.52 | ||
| EV/EBITDA | 12.08 |
EPS(TTM)10.87
EY6.78%
EPS(NY)10.74
Fwd EY6.7%
FCF(TTM)9.31
FCFY5.8%
OCF(TTM)9.87
OCFY6.16%
SpS83.49
BVpS64.09
TBVpS35.52
PEG (NY)N/A
PEG (5Y)0.99
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 | 7.34 |
F-Score6
WACC8.98%
ROIC/WACC1.21
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)2.64%
EPS 3Y6.34%
EPS 5Y14.89%
EPS Q2Q%3.27%
EPS Next Y-1.16%
EPS Next 2Y6%
EPS Next 3Y8.39%
EPS Next 5Y9.16%
Revenue 1Y (TTM)0.8%
Revenue growth 3Y7.95%
Revenue growth 5Y15.56%
Sales Q2Q%7.87%
Revenue Next Year12.43%
Revenue Next 2Y10.42%
Revenue Next 3Y10.5%
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%