Investors interested in stocks from the Outsourcing sector have probably already heard of Genpact (G) and Paychex (PAYX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Genpact has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). This means that G's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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 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.

G currently has a forward P/E ratio of 12.63, while PAYX has a forward P/E of 28.01. We also note that G has a PEG ratio of 1.28. 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. PAYX currently has a PEG ratio of 3.81.

Another notable valuation metric for G is its P/B ratio of 3.24. 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, PAYX has a P/B of 12.81.

These are just a few of the metrics contributing to G's Value grade of A and PAYX's Value grade of D.

G is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that G is likely the superior value option right now.

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Genpact Limited (G) : Free Stock Analysis Report

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