EPAM Systems, Inc.
EPAM Systems, Inc. Fundamental Analysis
EPAM Systems, Inc. (EPAM) shows moderate financial fundamentals with a PE ratio of 12.80, profit margin of 6.96%, and ROE of 10.67%. The company generates $5.4B in annual revenue with strong year-over-year growth of 15.42%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 75.5/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze EPAM's fundamental strength across five key dimensions:
Efficiency Score
WeakEPAM struggles to generate sufficient returns from assets.
Valuation Score
ExcellentEPAM trades at attractive valuation levels.
Growth Score
ModerateEPAM shows steady but slowing expansion.
Financial Health Score
ExcellentEPAM maintains a strong and stable balance sheet.
Profitability Score
WeakEPAM struggles to sustain strong margins.
Key Financial Metrics
Is EPAM Expensive or Cheap?
P/E Ratio
EPAM trades at 12.80 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, EPAM's PEG of -4.20 indicates potential undervaluation.
Price to Book
The market values EPAM Systems, Inc. at 1.44 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 8.19 times EBITDA. This is generally considered low.
How Well Does EPAM Make Money?
Net Profit Margin
For every $100 in sales, EPAM Systems, Inc. keeps $6.96 as profit after all expenses.
Operating Margin
Core operations generate 9.91 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.67 in profit for every $100 of shareholder equity.
ROA
EPAM Systems, Inc. generates $8.22 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
EPAM Systems, Inc. produces operating cash flow of $577.30M, showing steady but balanced cash generation.
Free Cash Flow
EPAM Systems, Inc. produces free cash flow of $527.99M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $10.11 in free cash annually.
FCF Yield
EPAM converts 11.27% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
12.80
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-4.20
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.44
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.87
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.08
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.67
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.11
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.14
vs 25 benchmark
How EPAM Stacks Against Its Sector Peers
| Metric | EPAM Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 12.80 | 36.74 | Better (Cheaper) |
| ROE | 10.67% | 968.00% | Weak |
| Net Margin | 6.96% | 5945062585.00% | Weak |
| Debt/Equity | 0.08 | 0.34 | Strong (Low Leverage) |
| Current Ratio | 2.67 | 4.94 | Strong Liquidity |
| ROA | 8.22% | -296476.00% (disorted) | Weak |
EPAM outperforms its industry in 3 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews EPAM Systems, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
104.58%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
15.10%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
19.94%
Industry Style: Growth, Innovation, High Beta
High Growth