IT Services Industry Report
Market Cap: $8.2T
Stocks: 152
Median P/E: 18.4x
Median ROIC: 6.1%
Data sourced from SEC EDGAR filings. Report refreshed weekly.
Part of the Technology sector.
Performance Dashboard
| Period | Sector (MCW) | Sector (Median) |
|---|---|---|
| 1 Day | +0.2% | +0.1% |
| 1 Week | -2.4% | +3.1% |
| 1 Month | — | — |
| 3 Months | — | — |
| 6 Months | — | — |
| YTD | +0.4% | +0.5% |
| 1 Year | +57.7% | -15.5% |
| 3 Years | +278.8% | -16.8% |
| 5 Years | +182.7% | -67.4% |
Today's Breadth: 67 advancing · 58 declining · 5 flat
Valuation Summary
| Metric | Median | P25 | P75 | vs 5Y Avg |
|---|---|---|---|---|
| P/E | 18.4x | 0.0x | 31.4x | -23% |
| P/B | 2.2x | 1.0x | 4.9x | -38% |
| P/S | 1.3x | 0.4x | 3.3x | — |
| P/FCF | 13.7x | 8.1x | 22.5x | — |
| EV/EBITDA | 12.3x | 8.9x | 19.5x | — |
| EV/EBIT | 16.8x | 12.4x | 22.5x | — |
Earnings Yield
3.8%
FCF Yield
4.6%
Below Fair Value
72% of stocks
Profitability Profile
Margins
| Metric | Median | 5Y Avg | P25 | P75 |
|---|---|---|---|---|
| Gross Margin | 55.9% | 55.2% | 32.5% | 71.7% |
| Operating Margin | 6.6% | — | -4.7% | 13.9% |
| Net Margin | 3.4% | 0.0% | -8.2% | 9.9% |
| FCF Margin | 10.4% | — | 2.0% | 20.7% |
Returns on Capital
| Metric | Median | 5Y Avg | P25 | P75 |
|---|---|---|---|---|
| ROE | 5.0% | — | -13.0% | 19.0% |
| ROA | 2.3% | — | -5.4% | 7.6% |
| ROIC | 6.1% | 3.7% | -7.8% | 21.7% |
Growth Metrics
| Metric | 1Y | 3Y CAGR | 5Y CAGR |
|---|---|---|---|
| Revenue | +4.8% | +7.6% | +11.3% |
| EPS | +19.0% | +12.7% | +12.1% |
| Free Cash Flow | +24.4% | +12.6% | +11.2% |
All values represent sector median growth rates.
Balance Sheet Health
Debt / Equity
0.3x
Net Debt / EBITDA
0.2x
Interest Coverage
3.1x
Current Ratio
1.5x
Altman Z-Score
Safe (>3): 53 (39%)
Gray (1.8–3): 20 (15%)
Distress (<1.8): 63 (46%)
Piotroski F-Score
Strong (7–9): 31 (21%)
Moderate (4–6): 85 (57%)
Weak (0–3): 34 (23%)
Top Companies
| Symbol | #▲ | Mkt Cap | P/E | EV/EBITDA | ROIC | Net Mgn | Rev Gr. | Div Yld | YTD | Qual. |
|---|---|---|---|---|---|---|---|---|---|---|
| GOOGL | 1 | $3.9T | 29.0x | 25.0x | 36.3% | 32.8% | +15.1% | 0.3% | +2.4% | 6/9 |
| GOOG | 2 | $1.9T | 13.9x | 11.8x | 36.3% | 32.8% | +15.1% | 0.6% | -1.9% | 6/9 |
| META | 3 | $1.6T | 28.2x | 16.5x | 33.1% | 30.1% | +22.2% | 0.3% | -2.4% | 6/9 |
| APP | 4 | $142.7B | 73.3x | 55.9x | 183.6% | 60.8% | +16.4% | — | +2.2% | 6/9 |
| ADP | 5 | $79.9B | 30.1x | 19.5x | 76.1% | 19.8% | +7.1% | 2.0% | -0.1% | 5/9 |
| WDAY | 6 | $32.1B | — | — | 9.7% | 7.3% | +13.1% | — | +0.8% | 4/9 |
| BIDU | 7 | $31.2B | — | — | 2.0% | 4.3% | -2.7% | — | -2.0% | 1/9 |
| BAIDF | 8 | $30.3B | — | — | 2.0% | 4.3% | -2.7% | — | -0.0% | 1/9 |
| RDDT | 9 | $30.2B | 86.2x | — | 115.5% | 24.1% | +69.4% | — | +9.1% | 4/9 |
| ZM | 10 | $25.5B | 15.6x | — | 55.7% | 39.0% | +4.4% | — | +1.4% | 7/9 |
| VRSK | 11 | $23.5B | 34.0x | 20.4x | 38.2% | 29.6% | +6.6% | 0.8% | +2.9% | 7/9 |
| LDOS | 12 | $20.5B | 16.8x | 11.4x | 20.2% | 8.4% | +3.1% | 0.9% | -4.1% | 4/9 |
| FLUT | 13 | $18.7B | — | 30.8x | 0.2% | -1.9% | +16.6% | — | +3.5% | 1/9 |
| CAP-PA | 14 | $17.1B | 16.0x | 9.6x | 12.1% | 7.6% | -2.4% | 2.3% | — | 5/9 |
| TOST | 15 | $16.6B | 65.1x | — | 15.7% | 5.6% | +24.1% | — | +1.8% | 2/9 |
| PINS | 16 | $12.3B | 42.9x | — | 12.5% | 9.9% | +15.8% | — | +2.1% | 8/9 |
| IOT | 17 | $12.1B | — | — | -0.7% | -0.6% | +29.6% | — | +5.8% | 1/9 |
| CACI | 18 | $12.1B | 20.8x | 11.0x | 10.9% | 5.8% | +12.6% | — | +0.3% | 3/9 |
| GDDY | 19 | $11.5B | 20.4x | 16.6x | 30.2% | 17.7% | +8.3% | — | +5.4% | 8/9 |
| JKHY | 20 | $11.1B | 28.4x | 20.9x | 21.7% | 19.2% | +7.2% | 1.3% | +0.3% | 4/9 |
Industry Composition
| Industry | Stocks | Market Cap | % | |
|---|---|---|---|---|
| Services-Computer Programming, Data Processing, Etc. | 49 | $7.8T | 94.8% | |
| Services-Computer Processing & Data Preparation | 53 | $251.9B | 3.1% | |
| Services-Computer Integrated Systems Design | 33 | $128.6B | 1.6% | |
| Information Technology Services | 17 | $48.5B | 0.6% |
Quality Distribution
0
1
2
3
4
5
6
7
8
9
Quality Score (0-9)
High Quality (7+)
7%
Median Piotroski F
5/9
Profitable Years
3 of 10
Dividends & Shareholder Returns
Paying Dividends
24%
Median Div Yield
1.2%
Median Buyback Yield
1.2%
Shareholder Yield
1.8%
Payout Ratio
28.2%
Div Growth (3Y)
7.5%
Div Growth (5Y)
7.8%
Strengths & Weaknesses
Strengths
- +[Growth]Strong secular growth with a median 5-year revenue CAGR of 11.3%, outpacing nominal GDP.
- +[Profitability]High pricing power with a median gross margin of 55.9%, reflecting differentiated products or strong brand moats.
- +[Valuation]Attractive valuations: current median P/E of 18.4x is 22.7% below the 5-year average, presenting potential value opportunity.
- +[Valuation]71.6% of companies trade below estimated fair value, indicating broad-based undervaluation.
Weaknesses
- −[Financial Health]46.3% of companies fall in the Altman Z-Score distress zone (<1.8), indicating elevated bankruptcy risk within the sector.
- −[Leverage]Tight interest coverage at 3.1x, leaving limited cushion for debt servicing if earnings decline.
- −[Quality]Only 6.6% of companies score 7+ on the quality checklist, reflecting structural challenges in achieving consistent returns across the sector.