Business Process Outsourcing (BPO) has witnessed significant changes due to the high adoption of cloud computing in the U.S. market. The delivery of BPO services has transformed mainly owing to the rising popularity of cloud computing, which provides numerous benefits to businesses.
Additionally, The BPO market is expected to witness significant growth due to the increasing adoption of automation technologies such as Robotic Process Automation (RPA) and Artificial Intelligence (AI). The U.S. business process outsourcing market is expected to grow at a CAGR of 9.1% by 2030. In 2025, the revenue in the BPO market is projected to reach a staggering $0.41 trillion worldwide.
Against this backdrop, let’s compare two established outsourcing stocks to analyze which business stock offers better growth prospects: Rollins, Inc. (ROL) and Genpact Limited (G).
The Case for Rollins, Inc. stock
Valued at $22.69 billion by market cap, Rollins, Inc. (ROL) provides pest and wildlife control services to residential and commercial customers in the United States and internationally. The company offers pest control services to residential properties, protecting from common pests, including rodents, insects, and wildlife.
ROL has declined 3.9% over the past month but gained 5.6% over the past nine months to close the last trading session at $46.85.
In terms of the trailing-12-month gross profit margin, ROL’s 52.64% is 66.1% higher than the 31.70% industry average. However, its 1.04% trailing-12-month CAPEX/Sales is 62.9% lower than the industry average of 2.82%.
ROL’s revenues for the third quarter that ended September 30, 2024, increased 9% year-over-year to $916 million. The company’s adjusted net income and adjusted EPS came in at $140 million and $0.29, up 3.3% and 3.6% from the prior year’s quarter, respectively.
Street expects ROL’s revenue for the quarter ended December 2024 to increase 8.5% year-over-year to $818.06 million. The company’s EPS for the same quarter is expected to gain 10.4% year-over-year to $0.23. Moreover, the company surpassed consensus revenue estimates in three of the trailing four quarters.
ROL’s POWR Ratings reflect mixed prospects. It has an overall rating of C, which translates to a Neutral in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ROL is ranked #19 out of 38 stocks in the Outsourcing - Business Services industry. It has a C grade for Growth and Sentiment. To see ROL’s Value, Momentum, Stability, and Quality ratings, click here.
The Case for Genpact Limited Stock
Valued at $7.80 billion by market cap, Genpact Limited (G) designs, manufactures, and markets software-enabled hardware solutions that connect people to working, creating, gaming, and streaming worldwide.
G’s stock has gained 13% over the past three months to close the last trading session at $44.20.
In terms of the trailing-12-month EBIT margin, G’s 14.37% is 39.2% higher than the 10.33% industry average. Likewise, its 16.42% trailing-12-month EBITDA margin is 16.9% higher than the industry average of 14.05%.
G’s net revenues for the third quarter that ended September 30, 2024, came in at $1.21 billion, up 6.1% year-over-year. Its adjusted income from operations increased 9.2% year-over-year to $212.96 million, and its adjusted EPS grew 11.8% over the previous year’s quarter to $0.85.
Analysts expect G’s revenue for the fourth quarter ended December 2024, to increase 7.3% year-over-year to $1.23 billion. Its EPS is expected to grow 5.1% year-over-year to $0.86 for the same quarter. Moreover, the company surpassed revenue and EPS estimates in each of the four trailing quarters.
G’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
G has a B grade in Quality, Momentum, and Stability. It is ranked #8 in the same industry.
Click here for the additional POWR Ratings for G (Growth, Sentiment, and Value).
Rollins (ROL) vs. Genpact (G): Which Business Serves Stock Offers Better Growth Prospects?
As organizations across industries increasingly recognize the strategic value of outsourcing for optimizing operations and enhancing competitiveness, the outlook for the outsourcing market remains promising. With continued technological advancements and evolving business needs, outsourcing presents unparalleled opportunities for organizations to streamline processes and drive growth in today's rapidly changing business environment.
Leading outsourcing companies, such as ROL and G, stand to capitalize on the optimistic industry outlook. However, G’s higher profitability and promising near-term outlook favor it as the better stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Outsourcing - Business Services industry here.
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ROL shares were trading at $46.87 per share on Wednesday afternoon, up $0.02 (+0.04%). Year-to-date, ROL has gained 1.12%, versus a 1.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Rollins (ROL) vs. Genpact (G): Which Business Serves Stock Offers Better Growth Prospects? StockNews.com
