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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Epam Systems, Inc. (XNYS:EPAM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EPAM
Name:
EPAM SYSTEMS, INC. (XNYS:EPAM)
Sector:
- 75122.00K
Industry:
Information Technology Services
CEO:
Mr. Arkadiy Dobkin
Total Employees:
58,824
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -92.44% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF EPAM SYSTEMS, INC.(EPAM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INFORMATION TECHNOLOGY SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
412.14
One Month Price Target:
$415.99
Six Month Price Target :
$435.23
Likely Price in One Year's Time:
Ticker:
$458.33
Likely Trading Range Today Under (Normal Volatility)
$410.15
Price Upper limit ($) :
$415.63
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$379.74
This week:
$339.69
This month :
$267.24
Other Primary facts
Market Cap:
23.57B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
57.37M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
25.19%
-45.68%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$562.32
$492.35
$261.96
$331.93
Medium risk (<10%) entry points
Buy Call
Sell Call
$469.57
Buy Put:
Sell Put:
$454.63
$354.52
$369.65
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EPAM
Sharpe Ratio:
4.44%
Comparison:
EPAM, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 144.88% higher than the industry
& ratio is 94.70% higher than the market/S&P 500 average
Average Returns/Yield of
EPAM
Daily returns:
0.18%
Weekly returns:
0.91%
Monthly returns:
3.65%
Yearly returns:
14.44%
Comparison of returns:
Average annual returns/yield (last 3 years) is 203.70% above industry average
Classification:
EPAM, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.92
Statistical test of Returns:
EPAM has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.92%
Weekly Volatility:
8.76%
Monthly Volatility:
17.52%
Yearly Volatility:
60.68%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.28%
Volatility in last five trading days has been -41.77% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.86%
Weekly VaR:
-17.58%
Monthly VaR:
-35.16%
How Much Can the price of
EPAM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-29%
Worst case (decline):
>85%
This translates to price declining to:
$292.66
This translates to price declining to:
$61.82
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
EPAM is a 148.14% riskier investment compared to the market/S&P 500 & is 112.58% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 29.10% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EPAM
Beta in relation to market/S&P 500--1.67
Expected beta in 1 year's time:
0.983
Expected beta in 3 year's time:
1.391
Unlevered (debt free) Beta:
1.575
Beta in relation to Nasdaq (XNAS):
1.259
Beta in relation to all global stocks::
0.949
Beta Comparison & Analysis
Beta of competitors/peers::
1.328
Beta is 25.60% higher than peers
Average Industry Beta:
1.209
Beta is 37.98% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
19.77%
Sustainable growth rate is -86.72% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.293
Alpha is 873.57% above industry average alpha yield
Alpha is 1863% higher than market/& is unsustainably high
Analysis of Cost of Capital of
EPAM
Equity cost of capital:
0.146
Equity cost of capital is 27.51% above industry mean WACC
Unlevered (without debt) cost of capital:
13.76%
Before-tax cost of debt:
4.31%
After-tax cost of debt:
3.41%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.41%
WACC is 65.36% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$72.32
Revenue growth rate per share of (3Y):
9.26
Annual revenue growth rate is 404.28% above the industry average
EPS:
$7.82
Expected Annual growth rate of EPS (3Y):
19.55%
Expected future EPS growth rate is 476.30% higher than the Information Technology Services industry
Free cash flow (FCF) per share:
$6.59
-
-
Debt per share
$2.99
EBITDA per share
$11.95
Valuation Analysis Today of
EPAM
P/E Ratio:
66.56
P/E Ratio of Competitors/Peers:
14.18
P/E ratio is 369.53% higher than main peers & is 40.22% higher than the industry
Stock price/value with industry average P/E ratio: $371.20
EPAM is 11.03% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
5.7
Price to sales ratio is 56.05% above the industry mean
P/B (Price to book value ratio):
9.26
Price to free cash flow: 62.58
-
Net income growth rate (3Y):
89.77%
Net income growth rate is -99.89% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
6.71%
Net debt to equity ratio:
-41.07%
Debt to assets ratio:
4.89%
Net debt to assets ratio:
-29.88%
Debt-to-asset ratio is -92.30% below industry average
Ability to repay debt:
Interest coverage ratio:
69.6
Interest coverage ratio is 66.60% more than industry average
Looking forward:
Debt growth rate:
178.75%
Annual debt growth is 2908% higher than industry average debt growth rate
Debt repayment rate in last quarter: 3.84%
Analysis of Key Statistics
Correlation of price movement with the market:
0.545
Statistical significance of correlation:
EPAM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.596
Stock price is -8.57% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.596
Correlation of price movement with Nasdaq (^IXIC):
-0.005
Covariance of price movement with the market:
-0.012
Kurtosis
32.249
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-1.797
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
EPAM
Gross Profit Margin Ratio:
135%
Operating Profit Margin Ratio:
13.60%
Operating profit margin is -295.89% lower than the industry
Net Profit Margin Ratio:
135%
Effective Tax Rate:
11.90%
Effective tax rate is -54.94% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
18.12%
Return on equity (ROE) is -67.79% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.18%
Return on assets (ROA) is 15340.57% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
3.32
Current ratio is 43.28% above industry average
Cash Conversion Cycle (days):
71
Cash conversion cycle is 89.48% above industry average
The remaining useful life of property plant & equipment is: 9.2 years
Stock based compensation to net income ratio:
1.54%
In-depth Efficiency Analysis
Revenue generated per employee:
70.5K
Each employee generates -83% less revenue than industry average revenue per employee
EBITDA generated per employee:
11.7K
Each employee generates -74% less EBITDA than industry average revenue per employee
Profit generated per employee:
7.9K
Each employee generates -8% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 1.3K
Each employee generates -81% less free cash flow than industry average revenue per employee
Assets/Capital per employee
21.1K
Each employee generates -81% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
EPAM
CORNING INCORPORATED (XNYS:GLW)
PALANTIR TECHNOLOGIES INC. (XNYS:PLTR)
KEYSIGHT TECHNOLOGIES, INC. (XNYS:KEYS)
Nokia Corporation (XNYS:NOK)
UNITED MICROELECTRONICS CORP. (XNYS:UMC)
Unity Software Inc (XNYS:U)
WORK
FTV-PA
FORTIVE CORPORATION (XNYS:FTV)
Current Analyst Ratings
Strong buy�25%
Buy�46%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
4.15B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.75B
1.40B
-
-
749.62M
-
89.85M
839.47M
2.58M
9.85M
150.71M
685.32M
564.31M
462.33M
524.76M
62.44M
462.33M
Statement of Cash Flow
Date:
Period:
39.05M
Differed Income Tax :
- 10830.00K
Stock Based Compensation :
7.11M
Change in Working Capital :
- 250701.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
73.81M
Net Cash Provided by Operating Activities:
- 51848.00K
Investments in PP&E:
- 23274.00K
Net Acquisitions:
- 8207.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.28B
-
1.28B
901.26M
-
89.03M
2.27B
395.15M
534.14M
97.57M
-
161.30M
52.66M
1.24B
-
3.51B
19.41M
56.92M
20.26M
-
606.93M
683.25M
171.36M
99.20M
270.56M
-
953.81M
57.00K
1.92B
- 86150.0K
-
March 31, 2022 at 6:00:00 AM
3.58B
2.55B
3.51B
-
228.29M
- 1048176.0K
-
- 3082.00K
- 34563.00K
- 6836.00K
-
-
-
- 2768.00K
- 9604.00K
- 45407.00K
- 141422.00K
1.31B
1.45B
- 51848.00K
- 23274.00K
- 75122.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
EPAM
2023
2024
2025
2026
2027
$475.15
$528.40
$587.62
$653.48
$726.71