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EPAM

EPAM Systems NYSE:EPAM Stock Report

Last Price

US$358.40

Market Cap

US$20.6b

7D

-7.4%

1Y

-37.0%

Updated

27 Sep, 2022

Data

Company Financials +
EPAM fundamental analysis
Snowflake Score
Valuation4/6
Future Growth6/6
Past Performance1/6
Financial Health6/6
Dividends0/6

EPAM Stock Overview

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide.

EPAM Systems Competitors

Price History & Performance

Summary of all time highs, changes and price drops for EPAM Systems
Historical stock prices
Current Share PriceUS$358.40
52 Week HighUS$725.40
52 Week LowUS$168.59
Beta1.66
1 Month Change-15.19%
3 Month Change16.60%
1 Year Change-36.96%
3 Year Change97.53%
5 Year Change301.21%
Change since IPO2,460.00%

Recent News & Updates

Sep 19
Is EPAM Systems (NYSE:EPAM) Using Too Much Debt?

Is EPAM Systems (NYSE:EPAM) Using Too Much Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Sep 04
Calculating The Fair Value Of EPAM Systems, Inc. (NYSE:EPAM)

Calculating The Fair Value Of EPAM Systems, Inc. (NYSE:EPAM)

In this article we are going to estimate the intrinsic value of EPAM Systems, Inc. ( NYSE:EPAM ) by taking the expected...

Aug 19

EPAM Systems: Resilient In The Face Of Invasion

1H22 proved EPAM Systems' management’s ability to mitigate Ukraine invasion impact. Cost pressure is temporary. 25% growth to resume in YE23. Price target of US$600 +32% for EPAM Systems. Summary EPAM Systems, Inc. (EPAM) is well on its way to retaking 25% growth in YE23 after successfully executing crisis management in the wake of the Russian invasion of Ukraine that threated the company’s viability. EPAM has relocated and hired IT personnel, kept clients, and increased revenue as seen in 2Q22 results. I estimate a return to 25% revenue growth and normalized margins in YE23 that drives a fair price target of US$600. Existential Threat Avoided EPAM has successfully evaded a major disaster. The IT consultant had over 58% of its IT delivery staff in Ukraine, Russia, and Belarus when the Ukraine invasion began. This posed a major existential risk to operations. The stock dropped 50% in a few days as the company pulled guidance and began to execute personnel relocation and rapid hiring in other key IT software staffing markets such as India and Latina America. The key question at the time was how fast could it replace, at worst, 58% of its IT staff and would clients postpone or cease projects with EPAM, was the company viable? EPAM IT head count breakdown (Created by author with data from EPAM) The 1Q22 results appeased the worst case scenario as client hours continued to be delivered and personnel relocation began. 2Q22 results have further eased fears on the revenue front as EPAM has been able to expand IT workforce and maintain a high level of utilization as well as increase pricing. However, the rapid hiring across other markets and relocation related expenses has bit into margins. IT head count growth reached record levels during YE21 and then declined to an under 30% year over year pace in 2Q22. However, from 1Q22 to 2Q22, the impact of the Ukraine invasion is seen with a flat IT workforce at 55k. This is extraordinarily positive given that about 41% of IT staff was in Ukraine and Russia and subject to sever disruption. A further positive driver, revenue per IT employee is still growing at a 10% pace. Growth YoY for EPAM IT staff and revenue per person (Created by author with data from EPAM) EPAM IT staff and revenue per worker (Created by author with data from EPAM) However, EPAMs ability to maintain its IT workforce functioning came at a cost. The company relocated much of the Russian staff and provided extra assistance to Ukraine and accelerated hiring in other markets, all of which resulted in higher costs and lower productivity. The net result was a 389-basis point reduction in EBITDA margin to 13.8% or about US$47m in additional costs. This margin pressure should continue in 2H22 before normalizing in YE23 as indicated by management guidance. EBITDA margin impact in 2Q22 (Created by author with data from EPAM) Valuation In my view, EPAM is out of danger and back on track to resume growth and recuperate margins in YE23 as it greatly diversifies the IT delivery base as well as maintains and grows its customer contracts. Under my estimates, which are a bit higher than consensus and at a target P/E of 35x, in line with historic levels (excluding the YE20-YE21), the stock could reach US$600 by YE23. EPAM Consensus Estimates vs Author (Created by author with data from Capital IQ) Historic PE valuation for EPAM and select peers (Created by author with data from Capital IQ) Peer Comps Some very large and recognizable peers include Accenture (ACN) and Cognizant (CTSH). The primary difference in valuation is due to growth, smaller companies like EPAM, Globant (GLOB) and Endava (DAVA) have room to grow faster, at least for the next 5 years. EPAM peer comps (Created by author with data from Capital IQ) What is EPAM The company provides businesses with software engineering, design and consulting to digitize front end sales/customer interactions and back-end production/administration as well as implement SAP, Big data and Machine Learning etc. It’s a growing US$1 trillion market and essential capex for all sectors and companies. EPAM has a human-capital intensive operating model where IT engineers, of all disciplines, execute customer projects on a contact bases. Clients usually have a 6 months or longer contract time frame, which provides for a good forward view of revenue and earnings. The industry charges by manhours required to meet project needs while costs are predominantly wages. The key margin drivers come from sourcing human capital in lower cost markets, i.e., the developing world such as Eastern Europe, India and Latina America that have solid pools of talent at lower wages. Operating leverage comes from higher utilization of this work force, i.e., the level of engagement in a client project vs down time.

Shareholder Returns

EPAMUS ITUS Market
7D-7.4%-6.9%-5.8%
1Y-37.0%-38.0%-22.1%

Return vs Industry: EPAM exceeded the US IT industry which returned -39.7% over the past year.

Return vs Market: EPAM underperformed the US Market which returned -23.7% over the past year.

Price Volatility

Is EPAM's price volatile compared to industry and market?
EPAM volatility
EPAM Average Weekly Movement6.9%
IT Industry Average Movement8.0%
Market Average Movement6.9%
10% most volatile stocks in US Market15.7%
10% least volatile stocks in US Market2.8%

Stable Share Price: EPAM is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: EPAM's weekly volatility has decreased from 12% to 7% over the past year.

About the Company

FoundedEmployeesCEOWebsite
199358,824Arkadiy Dobkinhttps://www.epam.com

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration; infrastructure management services, such as software development, testing, and maintenance with private, public, and mobile infrastructures for application, database, network, server, storage, and systems operations management, as well as monitoring, incident notification, and resolution services; and maintenance and support services. It also provides operation solutions comprising integrated engineering practices and smart automation; and optimization solutions that include software application testing, test management, automation, and consulting services to enable customers enhance their existing software testing and quality assurance practices, as well as other testing services that identify threats and close loopholes to protect its customers’ business systems from information loss.

EPAM Systems Fundamentals Summary

How do EPAM Systems's earnings and revenue compare to its market cap?
EPAM fundamental statistics
Market CapUS$20.56b
Earnings (TTM)US$366.26m
Revenue (TTM)US$4.46b

56.1x

P/E Ratio

4.6x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
EPAM income statement (TTM)
RevenueUS$4.46b
Cost of RevenueUS$2.97b
Gross ProfitUS$1.49b
Other ExpensesUS$1.12b
EarningsUS$366.26m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)6.38
Gross Margin33.36%
Net Profit Margin8.21%
Debt/Equity Ratio1.4%

How did EPAM perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is EPAM undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for EPAM?

Other financial metrics that can be useful for relative valuation.

EPAM key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue4.4x
Enterprise Value/EBITDA25.9x
PEG Ratio1.3x

Price to Earnings Ratio vs Peers

How does EPAM's PE Ratio compare to its peers?

EPAM PE Ratio vs Peers
The above table shows the PE ratio for EPAM vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average30.6x
IT Gartner
29.6x-0.4%US$21.7b
CTSH Cognizant Technology Solutions
13.3x9.5%US$30.0b
GLOB Globant
61.8x32.6%US$7.9b
DOX Amdocs
17.6x7.4%US$9.6b
EPAM EPAM Systems
56.1x44.1%US$20.6b

Price-To-Earnings vs Peers: EPAM is expensive based on its Price-To-Earnings Ratio (56.1x) compared to the peer average (30.6x).


Price to Earnings Ratio vs Industry

How does EPAM's PE Ratio compare vs other companies in the US IT Industry?

Price-To-Earnings vs Industry: EPAM is expensive based on its Price-To-Earnings Ratio (56.1x) compared to the US IT industry average (25.6x)


Price to Earnings Ratio vs Fair Ratio

What is EPAM's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

EPAM PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio56.1x
Fair PE Ratio56.6x

Price-To-Earnings vs Fair Ratio: EPAM is good value based on its Price-To-Earnings Ratio (56.1x) compared to the estimated Fair Price-To-Earnings Ratio (56.6x).


Share Price vs Fair Value

What is the Fair Price of EPAM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: EPAM ($358.4) is trading below our estimate of fair value ($561.14)

Significantly Below Fair Value: EPAM is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is EPAM Systems forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

6/6

Future Growth Score 6/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


44.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: EPAM's forecast earnings growth (44.1% per year) is above the savings rate (1.9%).

Earnings vs Market: EPAM's earnings (44.1% per year) are forecast to grow faster than the US market (14.7% per year).

High Growth Earnings: EPAM's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: EPAM's revenue (21.3% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: EPAM's revenue (21.3% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: EPAM's Return on Equity is forecast to be high in 3 years time (22.1%)


Discover growth companies

Past Performance

How has EPAM Systems performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


27.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: EPAM has a large one-off loss of $142.7M impacting its June 30 2022 financial results.

Growing Profit Margin: EPAM's current net profit margins (8.2%) are lower than last year (13.1%).


Past Earnings Growth Analysis

Earnings Trend: EPAM's earnings have grown significantly by 27.8% per year over the past 5 years.

Accelerating Growth: EPAM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: EPAM had negative earnings growth (-8.1%) over the past year, making it difficult to compare to the IT industry average (20.5%).


Return on Equity

High ROE: EPAM's Return on Equity (14%) is considered low.


Discover strong past performing companies

Financial Health

How is EPAM Systems's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: EPAM's short term assets ($2.4B) exceed its short term liabilities ($684.7M).

Long Term Liabilities: EPAM's short term assets ($2.4B) exceed its long term liabilities ($255.3M).


Debt to Equity History and Analysis

Debt Level: EPAM has more cash than its total debt.

Reducing Debt: EPAM had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: EPAM's debt is well covered by operating cash flow (1398.4%).

Interest Coverage: EPAM earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


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Dividend

What is EPAM Systems's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

EPAM Systems Dividend Yield vs Market
How does EPAM Systems dividend yield compare to the market?
SegmentDividend Yield
Company (EPAM Systems)n/a
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (IT)1.6%
Analyst forecast in 3 Years (EPAM Systems)0%

Notable Dividend: Unable to evaluate EPAM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate EPAM's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if EPAM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if EPAM's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as EPAM has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

6.1yrs

Average management tenure


CEO

Arkadiy Dobkin (62 yo)

19.75yrs

Tenure

US$5,921,524

Compensation

Mr. Arkadiy Dobkin co-founded EPAM Systems, Inc., a subsidiary of B2BITS Corp. in 1993 and has been Chairman, Chief Executive Officer and President since December 2002. Mr. Dobkin began his career in Russi...


CEO Compensation Analysis

Arkadiy Dobkin's Compensation vs EPAM Systems Earnings
How has Arkadiy Dobkin's remuneration changed compared to EPAM Systems's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$366m

Mar 31 2022n/an/a

US$462m

Dec 31 2021US$6mUS$688k

US$482m

Sep 30 2021n/an/a

US$425m

Jun 30 2021n/an/a

US$399m

Mar 31 2021n/an/a

US$351m

Dec 31 2020US$5mUS$625k

US$327m

Sep 30 2020n/an/a

US$316m

Jun 30 2020n/an/a

US$294m

Mar 31 2020n/an/a

US$286m

Dec 31 2019US$4mUS$588k

US$261m

Sep 30 2019n/an/a

US$246m

Jun 30 2019n/an/a

US$245m

Mar 31 2019n/an/a

US$237m

Dec 31 2018US$4mUS$538k

US$240m

Sep 30 2018n/an/a

US$149m

Jun 30 2018n/an/a

US$126m

Mar 31 2018n/an/a

US$114m

Dec 31 2017US$3mUS$488k

US$73m

Sep 30 2017n/an/a

US$128m

Jun 30 2017n/an/a

US$112m

Mar 31 2017n/an/a

US$99m

Dec 31 2016US$3mUS$438k

US$99m

Sep 30 2016n/an/a

US$102m

Jun 30 2016n/an/a

US$99m

Mar 31 2016n/an/a

US$94m

Dec 31 2015US$3mUS$400k

US$84m

Compensation vs Market: Arkadiy's total compensation ($USD5.92M) is below average for companies of similar size in the US market ($USD13.05M).

Compensation vs Earnings: Arkadiy's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

Experienced Management: EPAM's management team is seasoned and experienced (6.1 years average tenure).


Board Members

Experienced Board: EPAM's board of directors are considered experienced (6.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: EPAM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NYSE:EPAM Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
18 Aug 22SellUS$252,120Gary AbrahamsIndividual557US$452.64
07 Jun 22SellUS$34,710Elaina ShekhterIndividual100US$347.10
20 May 22SellUS$134,000Jason PetersonIndividual400US$335.00
10 May 22SellUS$130,000Jason PetersonIndividual400US$325.00
02 Dec 21SellUS$519,376Ronald VargoIndividual850US$611.03
17 Nov 21SellUS$495,507Robert SegertIndividual745US$665.11

Ownership Breakdown

What is the ownership structure of EPAM?
Owner TypeNumber of SharesOwnership Percentage
State or Government33,8000.06%
Individual Insiders1,746,3253.0%
General Public2,203,8333.8%
Institutions53,383,47493.1%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 72.83% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
16.25%
Capital Research and Management Company
9,324,681$3.3b12.07%0.23%
10.98%
The Vanguard Group, Inc.
6,297,864$2.3b1.01%0.05%
6.89%
BlackRock, Inc.
3,953,682$1.4b-11.78%0.04%
4.71%
AllianceBernstein L.P.
2,703,171$968.8m30.64%0.41%
4.64%
WCM Investment Management, LLC
2,659,477$953.2m-6.65%2.22%
4.08%
J.P. Morgan Asset Management, Inc.
2,338,907$838.3m0.66%0.16%
3.8%
State Street Global Advisors, Inc.
2,177,749$780.5m-11.9%0.04%
2.9%
Arkadiy Dobkin
1,664,372$596.5m-0.03%no data
2.21%
Lone Pine Capital LLC
1,266,683$454.0m0%4.14%
1.96%
FMR LLC
1,125,900$403.5m50.57%0.04%
1.89%
Geode Capital Management, LLC
1,082,964$388.1m1.31%0.05%
1.38%
Teachers Insurance and Annuity Association-College Retirement Equities Fund
793,661$284.4m21.82%0.1%
1.38%
UBS Asset Management
791,981$283.8m4.01%0.06%
1.3%
Invesco Ltd.
743,892$266.6m11.48%0.09%
1.24%
Northern Trust Global Investments
711,737$255.1m-4.9%0.05%
1%
Harding Loevner LP
575,024$206.1m-12.05%0.62%
0.87%
Norges Bank Investment Management
498,266$178.6m0%0.02%
0.76%
Columbia Management Investment Advisers, LLC
435,305$156.0m24.72%0.05%
0.76%
Invesco Capital Management LLC
433,224$155.3m-31.45%0.12%
0.75%
BNY Mellon Asset Management
431,238$154.6m5.73%0.04%
0.68%
Allianz Asset Management AG
391,629$140.4m-17.82%0.13%
0.64%
Legal & General Investment Management Limited
366,424$131.3m-14.49%0.04%
0.64%
Martin Currie Limited
365,370$130.9m-7.52%1.73%
0.58%
Eaton Vance Management
331,862$118.9m52.65%0.05%
0.55%
Charles Schwab Investment Management, Inc.
314,877$112.9m4.66%0.03%

Company Information

EPAM Systems, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: EPAM Systems, Inc.
  • Ticker: EPAM
  • Exchange: NYSE
  • Founded: 1993
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Implied Market Cap: US$20.560b
  • Shares outstanding: 57.37m
  • Website: https://www.epam.com

Number of Employees


Location

  • EPAM Systems, Inc.
  • 41 University Drive
  • Suite 202
  • Newtown
  • Pennsylvania
  • 18940
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
EPAMNYSE (New York Stock Exchange)YesCommon SharesUSUSDFeb 2012
E3MDB (Deutsche Boerse AG)YesCommon SharesDEEURFeb 2012
EPAM *BMV (Bolsa Mexicana de Valores)YesCommon SharesMXMXNFeb 2012
E2PA34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 60 REPR 1 COMBRBRLJan 2022

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/27 00:00
End of Day Share Price2022/09/27 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.