The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how ASGN (NYSE: ASGN) and the rest of the it services & consulting stocks fared in Q2.

IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.

The 8 it services & consulting stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 0.5% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.3% since the latest earnings results.

Slowest Q2: ASGN (NYSE: ASGN)

Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.

ASGN reported revenues of $1.02 billion, down 1.4% year on year. This print exceeded analysts’ expectations by 2.4%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts’ full-year EPS guidance estimates.

"Revenues of $1.02 billion were above the high-end of our guidance range, while Adjusted EBITDA margin of 10.6% was at the top end of our expectations for the quarter,” said ASGN’s Chief Executive Officer, Ted Hanson.

Interestingly, the stock is up 4.8% since reporting and currently trades at $52.43.

Read our full report on ASGN here, it’s free.

Best Q2: EPAM (NYSE: EPAM)

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

EPAM reported revenues of $1.35 billion, up 18% year on year, outperforming analysts’ expectations by 1.5%. The business had a strong quarter with a solid beat of analysts’ EPS guidance for next quarter estimates and an impressive beat of analysts’ constant currency revenue estimates.

The market seems happy with the results as the stock is up 8.7% since reporting. It currently trades at $164.70.

Is now the time to buy EPAM? Access our full analysis of the earnings results here, it’s free.

Kyndryl (NYSE: KD)

Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE: KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers.

Kyndryl reported revenues of $3.74 billion, flat year on year, falling short of analysts’ expectations by 1.5%. It was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations.

Kyndryl delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.7% since the results and currently trades at $33.13.

Read our full analysis of Kyndryl’s results here.

IBM (NYSE: IBM)

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

IBM reported revenues of $16.98 billion, up 7.7% year on year. This result beat analysts’ expectations by 2.4%. Zooming out, it was a mixed quarter as it also produced a solid beat of analysts’ operating income estimates but revenue guidance for next quarter missing analysts’ expectations.

The stock is down 9.1% since reporting and currently trades at $256.40.

Read our full, actionable report on IBM here, it’s free.

Grid Dynamics (NASDAQ: GDYN)

With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.

Grid Dynamics reported revenues of $101.1 million, up 21.7% year on year. This number surpassed analysts’ expectations by 0.5%. It was a strong quarter as it also produced full-year revenue guidance topping analysts’ expectations and EPS in line with analysts’ estimates.

Grid Dynamics delivered the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is down 15.7% since reporting and currently trades at $8.

Read our full, actionable report on Grid Dynamics here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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