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EPAM – Market expectations are for Uniform ROA to reach new peaks, but management may have concerns about growth, margins, and investments

March 31, 2021

  • EPAM Systems, Inc. (EPAM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 54.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their revenue growth, gross margins, and expansion investments
  • Specifically, management may lack confidence in their ability to maintain rapid growth, execute as an IT strategy and implementation partner for Epic Games, and design product management solutions for clients. In addition, they may have concerns about margin headwinds from their growth investments and their entry into new markets in Eastern Europe. Furthermore, they may lack confidence in their ability to sustain sales growth from new work and existing clients and achieve their income from operations targets. Also, they may be concerned about their revenue mix, the impact of FX rates on their revenue growth, and the sustainability of IT investments from retailer and consumer goods clients