Why EPAM Systems Stock Just Crashed

IT consultant EPAM Systems (NYSE: EPAM) banal tumbled 18.4% done 10 a.m. ET Thursday contempt beating connected some income and net this morning.

Heading into the company's Q4 net report, analysts expected EPAM to gain $3.16 per stock connected income conscionable nether $1.4 billion. EPAM really earned $3.26 per share, and connected income conscionable over $1.4 billion.

Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected the 1 little-known company, called an "Indispensable Monopoly" providing the captious exertion Nvidia and Intel some need. Continue »

Earnings whitethorn not person been rather arsenic bully they seem, however. While income surged 13% for EPAM successful Q4, and the institution "beat" connected its pro forma profits fig (non-GAAP net were up 15%), existent net calculated nether mostly accepted accounting principles (GAAP) were lone $1.98 per share.

That's 39% little than non-GAAP net and lone a 10% summation twelvemonth implicit year.

For the afloat year, EPAM reported 15% income maturation to $5.5 billion, non-GAAP profits up lone 6%, and GAAP profits down 14% astatine $6.72 per share.

EPAM CEO Balazs Fejes says EPAM is "scaling and accelerating our AI-native revenues" (that's right, EPAM says it's an artificial quality stock), and the gross maturation bears that out. Still, the anemic GAAP nett show successful Q4 and the year-over-year diminution successful profits are concerning.

The bully quality is that, erstwhile turning to guidance, EPAM suggested profits volition soon improve. In 2026, the institution is looking for income maturation to dilatory to astir 6%, but for net to surge up to astir $8.10 per stock -- 20% amended than past year, and 3 times the complaint of income growth.

With EPAM banal trading for conscionable implicit $136 today, that works retired to a price-to-earnings ratio of lone 16.8x connected a banal increasing net astatine 20%. Today's sell-off conscionable mightiness beryllium a buying accidental for EPAM investors.

Before you bargain banal successful EPAM Systems, see this:

The Motley Fool Stock Advisor expert squad conscionable identified what they judge are the 10 champion stocks for investors to bargain now… and EPAM Systems wasn’t 1 of them. The 10 stocks that made the chopped could nutrient monster returns successful the coming years.

Consider erstwhile Netflix made this database connected December 17, 2004... if you invested $1,000 astatine the clip of our recommendation, you’d person $420,595!* Or erstwhile Nvidia made this database connected April 15, 2005... if you invested $1,000 astatine the clip of our recommendation, you’d person $1,152,356!*