Investors looking for stocks in the Business - Services sector might want to consider either General Finance (GFN - Free Report) or WNS (Holdings) Limited (WNS - Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
General Finance has a Zacks Rank of #2 (Buy), while WNS (Holdings) Limited has a Zacks Rank of #3 (Hold) right now. This means that GFN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
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.
GFN currently has a forward P/E ratio of 14.87, while WNS has a forward P/E of 20.83. We also note that GFN has a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WNS currently has a PEG ratio of 1.69.
Another notable valuation metric for GFN is its P/B ratio of 2.23. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WNS has a P/B of 5.81.
These metrics, and several others, help GFN earn a Value grade of B, while WNS has been given a Value grade of C.
GFN sticks out from WNS in both our Zacks Rank and Style Scores models, so value investors will likely feel that GFN is the better option right now.