Investors interested in stocks from the Business - Services sector have probably already heard of Concentrix Corporation (CNXC) 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, Concentrix Corporation has a Zacks Rank of #2 (Buy), while SGS SA has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CNXC likely has seen a stronger improvement to its earnings outlook than SGSOY has recently. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CNXC currently has a forward P/E ratio of 10.10, while SGSOY has a forward P/E of 22.57. We also note that CNXC has a PEG ratio of 0.83. 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. SGSOY currently has a PEG ratio of 3.54.
Another notable valuation metric for CNXC is its P/B ratio of 2.40. 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, SGSOY has a P/B of 12.69.
These metrics, and several others, help CNXC earn a Value grade of A, while SGSOY has been given a Value grade of C.
CNXC has seen stronger estimate revision activity and sports more attractive valuation metrics than SGSOY, so it seems like value investors will conclude that CNXC is the superior option right now.
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