GENPACT LTD (NYSE:G) – An Undervalued Stock with Strong Fundamentals

GENPACT LTD (NYSE:G) was identified by our Decent Value stock screener as a potential opportunity for value investors. The company combines an attractive valuation with solid profitability, financial health, and steady growth. Below, we examine why G stands out based on its fundamental metrics.

Valuation

GENPACT’s valuation metrics suggest the stock is priced attractively compared to peers and the broader market:

• P/E Ratio: At 12.84, G trades below the industry average of 33.93 and the S&P 500’s 26.43.
• Forward P/E: 11.08, indicating expectations of continued earnings growth.
• Price/Free Cash Flow: G is cheaper than 90% of its industry peers.
• Enterprise Value/EBITDA: Also favorable, priced lower than 80% of competitors.

These metrics suggest the stock is undervalued relative to its earnings potential.

Profitability

The company demonstrates strong profitability, with key highlights including:

• Return on Equity (ROE): 21.51%, outperforming 86.6% of industry peers.
• Operating Margin: 14.96%, better than 81.7% of competitors.
• Consistent Earnings: Positive earnings and cash flow over the past five years.

These factors indicate efficient operations and a well-managed business.

Financial Health

GENPACT maintains a robust balance sheet:

• Low Debt: Debt-to-Equity ratio of 0.49, indicating manageable leverage.
• Strong Liquidity: Current and Quick Ratios of 2.45, well above industry averages.
• Altman-Z Score: 3.96, signaling low bankruptcy risk.

The company’s financial stability reduces risk for investors.

Growth

While not a high-growth stock, G shows steady expansion:

• Revenue Growth: 7.35% year-over-year, with a 5-year average of 6.25%.
• EPS Growth: 9.57% over the past year, with expected annual growth of 10.33% ahead.

This consistent growth supports the case for long-term value appreciation.

Dividend

GENPACT offers a modest but growing dividend:

• Dividend Yield: 1.56%, slightly below the S&P 500 average but better than 85% of peers.
• Dividend Growth: 12.42% annual increase, with a stable payout ratio of 20.99%.

For a deeper dive, review the full fundamental report for GENPACT.

Our Decent Value screener lists more stocks with strong valuations and fundamentals, updated daily.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.