TaskUs (TASK) — a Rare Blend of Value and Growth Potential

Most of the time, the division between growth stocks and value stocks seems like it is set in stone. Every once in a while, however, an exception appears. That seems to be the case with TaskUs (NASDAQ: TASK).

You’re more than likely not familiar with TaskUs — but their client base consists of household names, such as Facebook (NASDAQ: META), Netflix (NASDAQ: NFLX), and Uber (NYSE: UBER).

The business fills a niche that, although important, tends to stay behind the scenes. TaskUs helps businesses run smoothly by handling important but time-consuming tasks — think customer service, content moderation, or data labeling and organization. 

Let’s take it from the top. On the whole, the stock has a Zen Rating of A (Strong Buy). This means our proprietary quant rating system, which evaluates 115 factors, identified it as a Strong Buy. In slightly more precise terms, stocks with an “A” rating provide an annual return of 32.52%, on average. Thus far, TASK stock has provided returns of 25.49% since the beginning of the year. It is currently trading at $15.26. 

TASK YTD price chart

Of all the component grades that come together for a final Zen Rating, Value and Growth happen to be the strongest suites of TASK — both of which are rated A.

Now, let’s drill down to specifics. Despite the positive price action seen in 2024, the P/E ratio of TaskUs stock is 25.47x — in contrast with the wider market average of 29.14x and the information technology services average of 31.26x.

It’s also significantly more appealing than industry peers in terms of book value — with a price-to-book (P/B) ratio of just 2.74x, far below the industry average of 5.47x. The price-to-earnings growth (PEG) ratio likewise sits at a comfortable 1.07x.

On its own, that would be enough to warrant a closer look at the stock as a value play. However, its growth forecasts are no less impressive. At 7.48% per year, revenues are forecast to outpace the industry’s expected growth of 4.63%. In terms of earnings growth, analysts are expecting to see 26.53% per year — higher than both the market’s 20.11% and the industry’s 19.15%.

If you’ve seen the sudden uptick in the chart above which occurred in early November, don’t worry. The cause of the surge was an outstanding quarter — the company’s Q3 2024 earnings call on November 7 saw earnings per share (EPS) come in at $0.31 — 15.63% higher than consensus estimates, while revenues of $255.35 million, representing 13.2% year-over-year (YoY) growth outperformed expectations by 4.12%.

In all likelihood, prudent investors who had already had long positions took advantage of the surge to take profits — there’s no underlying change in growth prospects, and the company even increased its annual guidance by $24 million. While it’s not a huge increase, this brings cumulative guidance revisions on an annual basis to 6.9%.

Last, but certainly not least, on December 2 the company announced a strategic partnership with Red Points, aimed at tackling the increasing problem of digital fraud and IP violations with the use of AI.

—> Click here to research TASK. If you want to narrow down your search for similar stocks, consider checking out our High Earnings Growth at a Reasonable Price screener.

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