Yahoo Finance CGEMY or ADP: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Outsourcing sector have probably already heard of Cap Gemini SA (CGEMY) and Automatic Data Processing (ADP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Cap Gemini SA is sporting a Zacks Rank of #2 (Buy), while Automatic Data Processing has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CGEMY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
CGEMY currently has a forward P/E ratio of 13.48, while ADP has a forward P/E of 26.04. We also note that CGEMY has a PEG ratio of 1.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ADP currently has a PEG ratio of 2.17.
Another notable valuation metric for CGEMY is its P/B ratio of 2.78. 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, ADP has a P/B of 23.76.
These metrics, and several others, help CGEMY earn a Value grade of A, while ADP has been given a Value grade of C.
CGEMY stands above ADP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CGEMY is the superior value option right now.
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Cap Gemini SA (CGEMY) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
