EPAM Stock Overview
EPAM Systems, Inc. provides digital platform engineering and software development services worldwide.
EPAM Systems Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$358.40|
|52 Week High||US$725.40|
|52 Week Low||US$168.59|
|1 Month Change||-15.19%|
|3 Month Change||16.60%|
|1 Year Change||-36.96%|
|3 Year Change||97.53%|
|5 Year Change||301.21%|
|Change since IPO||2,460.00%|
Recent News & Updates
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...
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...
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.
|EPAM||US IT||US Market|
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.
|EPAM Average Weekly Movement||6.9%|
|IT Industry Average Movement||8.0%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.7%|
|10% least volatile stocks in US Market||2.8%|
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
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
|EPAM fundamental statistics|
Is EPAM overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|EPAM income statement (TTM)|
|Cost of Revenue||US$2.97b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||6.38|
|Net Profit Margin||8.21%|
How did EPAM perform over the long term?See historical performance and comparison
Is EPAM undervalued compared to its fair value, analyst forecasts and its price relative to the market?
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
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.
|What is EPAM's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does EPAM's PE Ratio compare to its peers?
|EPAM PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
CTSH Cognizant Technology Solutions
EPAM EPAM Systems
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.
|Current PE Ratio||56.1x|
|Fair PE Ratio||56.6x|
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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How is EPAM Systems forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?
Future Growth Score6/6
Future Growth Score 6/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
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%)
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How has EPAM Systems performed over the past 5 years?
Past Performance Score1/6
Past Performance Score 1/6
Growing Profit Margin
Earnings vs Industry
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.
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How is EPAM Systems's financial position?
Financial Health Score6/6
Financial Health Score 6/6
Short Term Liabilities
Long Term Liabilities
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.
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What is EPAM Systems's current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Dividend Yield vs Market
|EPAM Systems Dividend Yield vs Market|
|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.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Arkadiy Dobkin (62 yo)
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|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$6m||US$688k|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$5m||US$625k|
|Sep 30 2020||n/a||n/a|
|Jun 30 2020||n/a||n/a|
|Mar 31 2020||n/a||n/a|
|Dec 31 2019||US$4m||US$588k|
|Sep 30 2019||n/a||n/a|
|Jun 30 2019||n/a||n/a|
|Mar 31 2019||n/a||n/a|
|Dec 31 2018||US$4m||US$538k|
|Sep 30 2018||n/a||n/a|
|Jun 30 2018||n/a||n/a|
|Mar 31 2018||n/a||n/a|
|Dec 31 2017||US$3m||US$488k|
|Sep 30 2017||n/a||n/a|
|Jun 30 2017||n/a||n/a|
|Mar 31 2017||n/a||n/a|
|Dec 31 2016||US$3m||US$438k|
|Sep 30 2016||n/a||n/a|
|Jun 30 2016||n/a||n/a|
|Mar 31 2016||n/a||n/a|
|Dec 31 2015||US$3m||US$400k|
Compensation vs Market: Arkadiy's total compensation ($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.
Experienced Management: EPAM's management team is seasoned and experienced (6.1 years average tenure).
Experienced Board: EPAM's board of directors are considered experienced (6.2 years average tenure).
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
|18 Aug 22||SellUS$252,120||Gary Abrahams||Individual||557||US$452.64|
|07 Jun 22||SellUS$34,710||Elaina Shekhter||Individual||100||US$347.10|
|20 May 22||SellUS$134,000||Jason Peterson||Individual||400||US$335.00|
|10 May 22||SellUS$130,000||Jason Peterson||Individual||400||US$325.00|
|02 Dec 21||SellUS$519,376||Ronald Vargo||Individual||850||US$611.03|
|17 Nov 21||SellUS$495,507||Robert Segert||Individual||745||US$665.11|
|Owner Type||Number of Shares||Ownership Percentage|
|State or Government||33,800||0.06%|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
EPAM Systems, Inc.'s employee growth, exchange listings and data sources
- 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
- EPAM Systems, Inc.
- 41 University Drive
- Suite 202
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|EPAM||NYSE (New York Stock Exchange)||Yes||Common Shares||US||USD||Feb 2012|
|E3M||DB (Deutsche Boerse AG)||Yes||Common Shares||DE||EUR||Feb 2012|
|EPAM *||BMV (Bolsa Mexicana de Valores)||Yes||Common Shares||MX||MXN||Feb 2012|
|E2PA34||BOVESPA (Bolsa de Valores de Sao Paulo)||BDR EACH 60 REPR 1 COM||BR||BRL||Jan 2022|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/27 00:00|
|End of Day Share Price||2022/09/27 00:00|
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.