WNS vs. SGSOY: Which Stock Should Value Investors Buy Now?
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Investors interested in Business - Services stocks are likely familiar with WNS (Holdings) Limited (WNS) and SGS SA (SGSOY). 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.
Currently, WNS (Holdings) Limited has a Zacks Rank of #2 (Buy), while SGS SA has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WNS has an improving earnings 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 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.
WNS currently has a forward P/E ratio of 13.98, while SGSOY has a forward P/E of 23.34. We also note that WNS 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. SGSOY currently has a PEG ratio of 2.78.
Another notable valuation metric for WNS is its P/B ratio of 3.45. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SGSOY has a P/B of 30.49.
These are just a few of the metrics contributing to WNS's Value grade of B and SGSOY's Value grade of C.
WNS has seen stronger estimate revision activity and sports more attractive valuation metrics than SGSOY, so it seems like value investors will conclude that WNS is the superior option right now.
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WNS (Holdings) Limited (WNS) : Free Stock Analysis Report
SGS SA (SGSOY) : Free Stock Analysis Report