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CGEMY vs. ADP: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Outsourcing sector might want to consider either Cap Gemini SA (CGEMY - Free Report) or Automatic Data Processing (ADP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Right now, Cap Gemini SA is sporting a Zacks Rank of #2 (Buy), while Automatic Data Processing has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CGEMY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CGEMY currently has a forward P/E ratio of 15.23, while ADP has a forward P/E of 26.53. We also note that CGEMY has a PEG ratio of 1.76. 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 2.21.

Another notable valuation metric for CGEMY is its P/B ratio of 3.13. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ADP has a P/B of 24.21.

These are just a few of the metrics contributing to CGEMY's Value grade of A and ADP's Value grade of C.

CGEMY sticks out from ADP in both our Zacks Rank and Style Scores models, so value investors will likely feel that CGEMY is the better option right now.


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Automatic Data Processing, Inc. (ADP) - free report >>

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