Genpact Ltd (NYSE:G): A Prime Value Stock with Strong Fundamentals

In value investing, finding stocks that trade for less than their intrinsic value while having good basic financials is a key method. This strategy, started by Benjamin Graham and developed further by investors such as Warren Buffett, looks for chances where the market might have incorrectly priced a security because of temporary sentiment or a lack of attention. One way to simplify this hunt is to use a "Decent Value" screen, which looks for companies with high valuation scores, meaning they could be undervalued, combined with good ratings in profitability, financial condition, and expansion. This screen tries to point out stocks that seem inexpensive and also have the business strength to possibly achieve their value later.

GENPACT LTD (NYSE:G) appears as a strong candidate through this view, having a fundamental rating of 7 out of 10, which positions it well in the IT Services industry. The company’s valuation numbers are especially notable, with a Price/Earnings ratio of 12.92 that is sensible by itself and also lower than 80.72% of its industry competitors. This discount is further supported by a Price/Forward Earnings ratio of 11.35, which implies the market may be setting too low a value on Genpact’s future earnings. Such numbers are important for value investors, as they give a numerical basis for judging if a stock is priced below its intrinsic value, matching the strategy’s main idea of buying assets for less than their value.

Apart from its good valuation, Genpact shows strong profitability, scoring 8 out of 10 in this area. The company has reliably produced profits and positive operating cash flows for the last five years, with a Return on Equity of 20.81% and a Return on Invested Capital of 13.94%, both placing in the high end of its industry. These numbers show efficient use of capital and good business performance, which are necessary for value investors looking for companies with the financial strength to maintain and build their business without too much risk. Profitability serves as protection against market swings and economic declines, supporting the safety margin that value investing focuses on.

Financial condition, another important part of the value model, is sufficiently met with a health rating of 6. Genpact keeps a careful debt structure, shown by a Debt-to-Equity ratio of 0.36 and a good Altman-Z score of 3.64, indicating very little risk of bankruptcy. The company has also lowered its share count in recent years, which can improve per-share value over time. While liquidity measures like the Current Ratio of 1.53 are average for the industry, they show enough short-term steadiness. For value investors, a good financial base lowers the chance of value traps, cases where a low-priced stock continues to worsen because of basic weaknesses, making financial health a required part of the screening process.

Expansion potential, though average with a rating of 5, are positive with an Earnings Per Share growth rate of 9.38% per year over recent years and an anticipated increase to 11.10% in the next few years. Revenue growth has been consistent at about 6.25%, with comparable forecasts going forward. This stable expansion profile supports the value argument by indicating that Genpact is not still but changing, which might lead to a new valuation by the market. Value investing usually requires waiting, and maintained expansion helps make sure that intrinsic value rises over time, finally closing the difference with market price.

The combination of these elements, low valuation, good profitability, stable financial condition, and consistent expansion, makes Genpact an interesting option for value-focused portfolios. Its fundamental report, available here, gives a full look at these numbers. For investors searching for similar chances, the ready-made "Decent Value" screen can be reviewed more through this link, providing a selected list of stocks that fit these standards.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.