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ATTO or G: Which Is the Better Value Stock Right Now?

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Investors interested in Outsourcing stocks are likely familiar with Atento and Genpact (G - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Atento and Genpact are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ATTO likely has seen a stronger improvement to its earnings outlook than G has recently. However, value investors will care about much more than just this.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ATTO currently has a forward P/E ratio of 2.75, while G has a forward P/E of 16.34. We also note that ATTO has a PEG ratio of 0.28. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. G currently has a PEG ratio of 1.17.

Another notable valuation metric for ATTO is its P/B ratio of 0.35. 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, G has a P/B of 3.87.

These metrics, and several others, help ATTO earn a Value grade of A, while G has been given a Value grade of C.

ATTO 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 ATTO is likely the superior value option right now.


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