Investors interested in Computers - IT Services stocks are likely familiar with Genpact (G) and Vertiv Holdings Co. (VRT). 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Genpact and Vertiv Holdings Co. are both sporting a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
G currently has a forward P/E ratio of 8.41, while VRT has a forward P/E of 43.26. We also note that G has a PEG ratio of 0.82. 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. VRT currently has a PEG ratio of 1.19.
Another notable valuation metric for G is its P/B ratio of 2.24. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, VRT has a P/B of 23.23.
These are just a few of the metrics contributing to G's Value grade of A and VRT's Value grade of D.
Both G and VRT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that G is the superior value option right now.
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