Featured Tickers: CTSH, EPAM, IT
This week, we use AAII’s A+ Investor Stock Grades to provide insight into three information technology (or, IT) services stocks. With increased investments creating growth opportunities within the IT services industry, should you consider the three stocks of Cognizant Technology Solutions Corp. (CTSH), EPAM Systems Inc. (EPAM) and Gartner Inc. (IT)?
IT Services Stocks Recent News
The IT services industry is entering a sustained growth phase as enterprises accelerate cloud migration and digital transformation efforts. An article by Grand View Research reports that the global IT services market was valued at $1.6 trillion in 2025 and is projected to grow to $3.3 trillion by 2033, reflecting a compound annual growth rate (CAGR) of 8.9%. North America led the industry with a 35% share of global revenue in 2025, driven by mature infrastructure and strong enterprise adoption of digital technologies, while Asia Pacific is expected to be the fastest-growing region going forward. Rising cyber threats and stricter data protection requirements are pushing organizations to increase spending on managed security services and compliance-driven IT solutions. The reactive IT services segment held the largest share of the market in 2025 at over 51%, as the importance of minimizing system disruptions of complex IT infrastructures forces organizations to invest in rapid-response solutions.
The report points out several forces that are converging to deepen enterprise reliance on outside IT providers. The growing adoption of artificial intelligence (AI) and automation is reshaping how businesses operate. At the same time, the shift toward remote and hybrid work has increased demand for secure collaboration tools and scalable digital infrastructure, while expanding IT adoption is driving further need for integrated network management. Retail stands out as the fastest-growing end-use segment, expected to grow at a 10.7% CAGR by 2033, as companies invest in customer relationship management (CRM) platforms and advanced inventory systems to improve efficiency, agility and customer satisfaction. Given the converging trends toward AI adoption, security spending and cloud infrastructure, should you invest in Cognizant Technology, EPAM Systems and Gartner?
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Grading IT Services Stocks With AAII’s A+ Stock Grades
When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades, which evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.
Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three IT services stocks—Cognizant Technology, EPAM Systems, and Gartner—based on their fundamentals.
AAII’s A+ Stock Grade Summary for Three IT Services Stocks
What the A+ Stock Grades Reveal
Cognizant Technology Solutions Corp. (CTSH) is a global professional services and digital transformation company with operations in the U.S., Europe and Asia Pacific. It offers IT, consulting and business process outsourcing services for clients across a broad range of industries, including financial services, healthcare, manufacturing and retail. Cognizant Technology provides a broad range of technology services, including application development and maintenance, cloud computing, AI, cybersecurity, and enterprise resource planning implementation. It also offers consulting, digital engineering and industry-specific solutions that help organizations modernize their technology infrastructure, automate business processes and accelerate their digital transformation journeys. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.
Cognizant Technology has a Value Grade of A, based on its Value Score of 82, which is deep value. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA). For these value metrics, a lower rank is more attractive. The company has a price-earnings ratio of 12.2, ranking in the 29th percentile among all U.S.-listed stocks. It also has a shareholder yield of 7.6%, ranking in the 9th percentile.
Cognizant Technology has a Quality Grade of A, based on a score of 86, which is very strong. Higher-quality stocks possess traits associated with upside potential and reduced downside risk. The Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.
The company ranks strongly in terms of its return on invested capital and return on assets. Its return on invested capital is 62.8%, which ranks in the 90th percentile and is above the sector median of 18.7%. Its return on assets is 10.8%, which ranks in the 88th percentile and is above the sector median of 0.9%.
EPAM Systems Inc. (EPAM) is a global digital transformation and software engineering company operating in the U.S., Europe, Asia and beyond. It offers software product development, digital platform engineering and technology consulting services for clients across the financial services, healthcare, life sciences, retail and media industries. EPAM Systems provides a broad range of technology services, including custom software development, cloud migration, data analytics and AI. It also offers industry-specific digital solutions and agile consulting services, helping organizations accelerate innovation, modernize legacy systems and build scalable digital products. The company was founded in 1993 and is headquartered in Newtown, Pennsylvania.
EPAM Systems has a Growth Grade of A, which is very strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. EPAM Systems has a five-year annualized sales growth rate of 15.5% and has generated positive annual cash from operations in the past five consecutive years.
Earnings estimate revisions indicate how analysts view a firm’s short-term profits. The company has an Earnings Estimate Revisions Grade of B, based on a score of 65, which is positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months. The company reported a positive earnings surprise of 7.6% for second-quarter 2026, and in the prior quarter reported a positive earnings surprise of 3.8%. Over the last three months, the consensus earnings estimate for third-quarter 2026 has decreased from $3.451 to $3.404 per share, while the consensus earnings estimate for full-year 2026 has increased from $13.062 to $13.151 per share.
EPAM Systems has a Quality Grade of A, based on a score of 95, which is very strong. The company ranks strongly in terms of its buyback yield and return on assets. Its buyback yield is 7.3%, ranking in the 94th percentile, and its return on assets is 8.7%, ranking in the 84th percentile.
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Gartner Inc. (IT) is a global research and advisory company operating globally. It offers actionable research, data analytics, consulting and conference services for senior executives and their teams across technology, finance, human resources, legal and supply chain functions. The company operates through three segments: research, conferences and consulting. Gartner provides a broad range of subscription-based research and advisory services, delivering insights, benchmarks and peer networking opportunities to help business leaders make informed decisions on technology investments. It also hosts large-scale global conferences, including its flagship Gartner IT Symposium/Xpo events, and provides specialized consulting and benchmarking services to help organizations optimize their technology and business performance. The company was founded in 1979 and is headquartered in Stamford, Connecticut.
The company has a Momentum Grade of B, based on its Momentum Score of 63. This means that the stock’s momentum is strong in terms of its weighted relative strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The ranks are 94, 20, 11 and 47, sequentially from the most recent quarter, with higher ranks signaling stronger price momentum. The weighted four-quarter relative price strength is 0.9%.
The company has a Growth Grade of A, which is very strong. Gartner has a five-year annualized sales growth rate of 9.6% and has generated positive annual cash from operations in the past five consecutive years.
The company has a Quality Grade of A, based on a score of 81, which is very strong. The company ranks strongly in terms of its buyback yield and gross income to assets. Its buyback yield is 13.8%, ranking in the 98th percentile, and its gross income to assets is 62.6%, ranking in the 93rd percentile.