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GFN vs. WNS: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Business - Services sector might want to consider either General Finance or WNS Holdings Limited (WNS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

General Finance and WNS Holdings Limited are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GFN is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

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.

GFN currently has a forward P/E ratio of 24.12, while WNS has a forward P/E of 28.16. We also note that GFN has a PEG ratio of 2.01. 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. WNS currently has a PEG ratio of 3.71.

Another notable valuation metric for GFN is its P/B ratio of 2.41. 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, WNS has a P/B of 5.44.

These are just a few of the metrics contributing to GFN's Value grade of A and WNS's Value grade of C.

GFN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GFN is likely the superior value option right now.


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