EPAM Systems, Inc. (EPAM)
Quantitative Summary
DeterministicAt 12.6x earnings — a 79% discount to the sector average of 60.0x — EPAM is in the lower valuation range. Financial health is average: Piotroski 6/9, Altman Z 4.8. DCF fair value of $222 implies 151% upside from current prices based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics of EPAM Systems reveal a capital allocation challenge where the return on invested capital of 10.5% falls significantly short of the estimated cost of equity, creating a negative ROIC-WACC spread of -5.1%. This value destruction is reflected in an ROE of 10.3%, driven primarily by moderate leverage rather than operational efficiency or pricing power, as evidenced by thin net margins at 6.9% despite robust revenue growth of 15.4%. While the Piotroski F-Score of 6/9 and Altman Z-Score of 6.3 suggest reasonable financial stability with no immediate distress signals indicated by a negative Beneish M-Score, the underlying capital efficiency remains suboptimal relative to sector peers.
Valuation metrics present a notable divergence between market pricing and intrinsic value models. The current P/E ratio of 18.2x trades at a substantial discount compared to the technology sector average of 58.2x, suggesting the market is not fully pricing in future growth potential or that specific risks are being weighed heavily by investors. A discounted cash flow analysis implies a fair value of $187 with an upside potential of 38.3%, assuming long-term free cash flow grows at an implied rate of 6.1% over the next decade. This discrepancy between the depressed multiple and the DCF-derived target indicates that current pricing may be conservative relative to projected cash generation, though it also reflects skepticism regarding sustainability given the low margin profile.
Risk-adjusted performance data highlights significant underperformance against standard factor benchmarks. The stock exhibits a negative Fama-French alpha of -54.68% annually and displays clear deviations from value characteristics, with a Value Factor score of -0.152 indicating a strong growth tilt that has not been rewarded historically. Furthermore, the Profitability Factor score of -0.324 underscores persistent weakness in profitability metrics relative to its peer group. With neutral insider flow over the last 90 days, there is no immediate signal from management regarding capital deployment or strategic shifts to address these structural inefficiencies.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 15% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 11.5% | 13.5% | 15.5% |
|---|---|---|---|
| 2% | $252 | $209 | $179 |
| 3% | $273 | $222 | $188 |
| 4% | $299 | $238 | $198 |
Center = base case. Green = >10% upside, Red = >10% downside vs $88.66.
Pre-computed DCF: WACC=13.5%, terminal growth 3%. Fair value $222 (+150.6%). Not investment advice.
Valuation Context
Currently trading 31% below its 5-year average P/E of 18.4x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedEPAM Systems, Inc. is currently trading at $100.51, a price point that requires contextualization against its moving average envelope to assess potential mean-reversion dynamics. Without specific values for the short-term or long-term Simple Moving Averages defining this band, it remains unclear whether the current valuation sits near the center of the range, suggesting equilibrium, or at an extreme boundary indicating stretched momentum. If the price were significantly displaced from the central tendency defined by these averages, historical patterns often suggest a gravitational pull back toward the mean over time. Conversely, proximity to the envelope's boundaries might imply continued volatility before such a correction occurs. The absence of explicit deviation metrics prevents a definitive conclusion on whether the stock is in an oversold state offering potential support or an overextended condition hinting at resistance. In relative-value terms, the current positioning dictates where future price action may gravitate; traders typically monitor these deviations to gauge if the asset has exhausted its directional move and is primed for stabilization near average cost levels. The interplay between the $100.51 mark and the implied moving averages will ultimately determine whether the technical setup favors a bounce or further trend continuation, leaving the interpretation of mean-reversion probability entirely dependent on the specific width and location of the surrounding envelope bands at this moment.
Quant Health Deep Dive
Profitability & Value Creation
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like XSW or SLYV, the fund manager is mechanically forced to buy or sell EPAM shares regardless of EPAM Systems, Inc.'s individual fundamentals. We estimate $456M of passive capital is structurally linked to EPAM through 8 tracked ETFs. Passive flows have a limited but growing influence on EPAM's daily trading dynamics.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in EPAM Systems, Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If EPAM Systems, Inc. (EPAM) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies MOLINA HEALTHCARE INC (MOH) as the most exposed collateral stock, sharing 2 ETFs with EPAM. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 16 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
EPAM Ownership Dynamics
Passive funds hold 1 in every 6 EPAM shares, reducing daily market volatility.
EPAM Systems, Inc. (EPAM) exerts notable gravity on the passive index market, currently representing 0.7% of the XSW (XSW) and 0.5% of the SLYV (SLYV). Across 22 tracked ETFs, approximately 9M shares (16.4% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest EPAM Exposure
Float lock-up computed from 22 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
EPAM Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for EPAM Systems, Inc. over the past year sits near $136.58 (9% of 252-day volume). The current price of $88.66 sits 35.1% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
EPAM Capital Efficiency
How efficiently does EPAM Systems, Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
EPAM Systems, Inc. converts 89% of its EBITDA into free cash flow, an exceptional conversion rate indicating an asset-light business model with minimal capital reinvestment drag. However, the ROIC-WACC spread is negative (-3.1%), suggesting reinvested capital is destroying shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-06-12 | 3,115 | $92.76 | $288,947.4 |
| 2026-06-05 | 38,477 | $97.59 | $3.8M |
| 2026-06-02 | 5,724 | $108.76 | $622,542.24 |
| 2026-05-28 | 2,425 | $101.68 | $246,574 |
| 2026-05-27 | 60 | $99.69 | $5,981.4 |
| 2026-05-22 | 2,755 | $103.19 | $284,288.45 |
| 2026-05-19 | 24,629 | $100.44 | $2.5M |
| 2026-05-18 | 45,128 | $93.02 | $4.2M |
| 2026-05-15 | 89 | $89.69 | $7,982.41 |
| 2026-05-11 | 279 | $99.23 | $27,685.17 |
| 2026-04-30 | 202 | $112.91 | $22,807.82 |
| 2026-04-28 | 4,644 | $116.31 | $540,143.64 |
| 2026-04-27 | 4,650 | $118.98 | $553,257 |
| 2026-04-15 | 11,996 | $127.41 | $1.5M |
| 2026-04-10 | 10,567 | $123.85 | $1.3M |
| 2026-04-01 | 600 | $135.40 | $81,240 |
| 2026-03-31 | 9,116 | $136.18 | $1.2M |
| 2026-03-30 | 14,457 | $135.19 | $2.0M |
| 2026-03-25 | 5,930 | $133.04 | $788,927.2 |
| 2026-03-23 | 500 | $137.43 | $68,715 |
| 2026-03-16 | 1,114 | $137.14 | $152,773.96 |
| 2026-03-12 | 494 | $141.98 | $70,138.12 |
| 2026-03-10 | 318,120 | $146.26 | $46.5M |
| 2026-03-09 | 200,297 | $145.87 | $29.2M |
| 2026-02-23 | 800 | $138.85 | $111,080 |
| 2026-02-20 | 766 | $139.16 | $106,596.56 |
| 2026-02-18 | 2,433 | $162.20 | $394,632.6 |
| 2026-02-11 | 554 | $191.61 | $106,151.94 |
| 2026-02-10 | 143 | $190.53 | $27,245.79 |
| 2026-01-08 | 32 | $218.20 | $6,982.4 |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| MGMXX | NaN | NaN | |
| GVMXX | NaN | NaN | |
| WTGXX | NaN | NaN | |
| ACN | 0.745 | 0.794 | High co-movement |
| CRM | 0.521 | 0.587 | Moderate |
| PAYX | 0.503 | 0.604 | Moderate |
| FIS | 0.489 | 0.557 | Moderate |
| WDAY | 0.484 | 0.563 | Moderate |
| TOST | 0.470 | 0.525 | Moderate |
| IQV | 0.469 | 0.531 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare EPAM to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-07-17.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.