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CGEMY vs. EXLS: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Outsourcing sector might want to consider either Cap Gemini SA (CGEMY) or ExlService Holdings (EXLS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Cap Gemini SA and ExlService Holdings are sporting a Zacks Rank of # 2 (Buy). 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 piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CGEMY currently has a forward P/E ratio of 16.71, while EXLS has a forward P/E of 26.75. We also note that CGEMY has a PEG ratio of 1.41. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EXLS currently has a PEG ratio of 2.05.

Another notable valuation metric for CGEMY is its P/B ratio of 3.02. 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 7.08.

These metrics, and several others, help CGEMY earn a Value grade of B, while EXLS has been given 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.


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Cap Gemini SA (CGEMY) : Free Stock Analysis Report
 
ExlService Holdings, Inc. (EXLS) : Free Stock Analysis Report
 
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Zacks Investment Research