Genpact Limited (G) vs. Exponent (EXPO) Critical Review

Genpact Limited (NYSE: G) and Exponent (NASDAQ:EXPO) are both business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

This table compares Genpact Limited and Exponent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genpact Limited 10.22% 23.33% 9.85%
Exponent 15.94% 16.52% 11.53%

Volatility and Risk

Genpact Limited has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Exponent has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Institutional and Insider Ownership

92.2% of Genpact Limited shares are held by institutional investors. Comparatively, 88.3% of Exponent shares are held by institutional investors. 1.6% of Genpact Limited shares are held by insiders. Comparatively, 2.8% of Exponent shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Genpact Limited and Exponent’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Genpact Limited $2.62 billion 2.16 $438.33 million $1.33 22.01
Exponent $311.50 million 6.24 $71.89 million $1.93 39.02

Genpact Limited has higher revenue and earnings than Exponent. Genpact Limited is trading at a lower price-to-earnings ratio than Exponent, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Genpact Limited and Exponent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genpact Limited 0 2 6 0 2.75
Exponent 0 0 1 0 3.00

Genpact Limited presently has a consensus target price of $32.29, suggesting a potential upside of 10.30%. Exponent has a consensus target price of $75.00, suggesting a potential downside of 0.40%. Given Genpact Limited’s higher probable upside, equities research analysts clearly believe Genpact Limited is more favorable than Exponent.

Dividends

Genpact Limited pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Exponent pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. Genpact Limited pays out 18.0% of its earnings in the form of a dividend. Exponent pays out 43.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Exponent beats Genpact Limited on 9 of the 16 factors compared between the two stocks.

Genpact Limited Company Profile

Genpact Limited is engaged in providing digitally powered business process management and services. The Company is also engaged in designing, transforming and running a combination of processes, as well as providing solutions that combine elements of its service offerings. The Company’s segments include Business process outsourcing and Information technology services. The Company offers various vertical activities, which include banking and financial services, capital markets, consumer product goods services, healthcare, infrastructure and manufacturing services, insurance and life sciences. In addition to these vertical activities, it also offers analytics and research, collections and customer services, consulting and transformation services, core industry operations services, enterprise application services, finance and accounting (F&A) services, information technology (IT) infrastructure management services, and supply chain and procurement services.

Exponent Company Profile

Exponent, Inc. (Exponent), along with its subsidiaries, is a science and engineering consulting company. Exponent provides engineering and scientific consulting services to clients around the world. Its service offerings are provided on a project-by-project basis. It operates in two segments: Engineering and Other Scientific, and Environmental and Health. Its Engineering and Other Scientific segment includes biomechanics, biomedical engineering, buildings and structures, civil engineering, construction consulting, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, statistical and data sciences, thermal sciences and vehicle analysis services. Its Environmental and Health segment includes chemical regulation and food safety; ecological and biological sciences; environmental and earth sciences, and health sciences. Exponent serves clients in automotive, government, health, insurance, manufacturing and technology, among others.

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