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CGEMY vs. EXLS: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors with an interest in Outsourcing stocks have likely encountered both Cap Gemini SA (CGEMY) and ExlService Holdings (EXLS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Cap Gemini SA and ExlService Holdings are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CGEMY currently has a forward P/E ratio of 16.07, while EXLS has a forward P/E of 30.79. We also note that CGEMY has a PEG ratio of 1.34. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EXLS currently has a PEG ratio of 2.37.

Another notable valuation metric for CGEMY is its P/B ratio of 2.91. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, EXLS has a P/B of 8.45.

Based on these metrics and many more, CGEMY holds a Value grade of A, while EXLS has a Value grade of C.

Both CGEMY and EXLS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CGEMY is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Cap Gemini SA (CGEMY) : Free Stock Analysis Report
 
ExlService Holdings, Inc. (EXLS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research