Yahoo Finance EXLS or ADP: Which Is the Better Value Stock Right Now?
Investors interested in Outsourcing stocks are likely familiar with ExlService Holdings (EXLS) and Automatic Data Processing (ADP). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, ExlService Holdings has a Zacks Rank of #2 (Buy), while Automatic Data Processing has a Zacks Rank of #3 (Hold). This means that EXLS'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.
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.
EXLS currently has a forward P/E ratio of 18.60, while ADP has a forward P/E of 26.49. We also note that EXLS has a PEG ratio of 1.26. 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. ADP currently has a PEG ratio of 2.31.
Another notable valuation metric for EXLS is its P/B ratio of 6.05. 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, ADP has a P/B of 21.47.
Based on these metrics and many more, EXLS holds a Value grade of B, while ADP has a Value grade of C.
EXLS stands above ADP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EXLS is the superior value option right now.
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ExlService Holdings, Inc. (EXLS) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
