Investors with an interest in Business - Services stocks have likely encountered both General Finance (GFN - Free Report) and WNS (Holdings) Limited (WNS - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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 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 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 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.
GFN currently has a forward P/E ratio of 15.54, while WNS has a forward P/E of 20.69. We also note that GFN has a PEG ratio of 1.29. 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 1.68.
Another notable valuation metric for GFN is its P/B ratio of 2.33. 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, WNS has a P/B of 5.77.
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.