WNS vs. TRI: Which Stock Is the Better Value Option?

Investors interested in stocks from the Business - Services sector have probably already heard of WNS (Holdings) Limited (WNS) and Thomson Reuters (TRI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, WNS (Holdings) Limited is sporting a Zacks Rank of #2 (Buy), while Thomson Reuters has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that WNS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

WNS currently has a forward P/E ratio of 16.25, while TRI has a forward P/E of 52.78. We also note that WNS has a PEG ratio of 1.88. 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. TRI currently has a PEG ratio of 6.39.

Another notable valuation metric for WNS is its P/B ratio of 4.13. 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, TRI has a P/B of 7.53.

Based on these metrics and many more, WNS holds a Value grade of B, while TRI has a Value grade of F.

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

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This article originally published on Zacks Investment Research (zacks.com).

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