Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE.

ExlService Holdings has delivered a 54.3% gain over the past 5 years, yet its current checks suggest the stock is not a clear bargain and recent shorter term returns have been more mixed. With the valuation indicators leaning cautious while the business continues to attract attention, investors are weighing how much of the story is already in the price.

• The 54.3% return over 5 years points to meaningful long term value creation for shareholders.

• The new US$1b senior secured credit facility can support mergers and acquisitions that may lift earnings over time, while the greater reliance on debt can add financial risk if conditions or execution do not go as planned.

• With a low value score and only 2 of 6 checks screening as attractive, ExlService Holdings currently leans expensive rather than a clear value opportunity.

The issue now is whether ExlService Holdings' current share price already reflects its long term prospects or still leaves room for a reasonable margin of safety.

Find out why ExlService Holdings' -14.5% return over the last year is lagging behind its peers.

Does ExlService Holdings Look Fairly Valued on Earnings?

The P/E ratio is a useful cross check for ExlService Holdings because earnings remain a key focus for how investors value the stock. ExlService Holdings currently trades on a P/E of about 22.5x, which is slightly above the Professional Services industry average of around 21.5x and also above the peer group average of roughly 14.7x.

The fair P/E ratio implied by the model is about 21.7x, which is only a small step below the current market multiple. That suggests the market is pricing ExlService Holdings broadly in line with what would be expected once its growth profile, margins, size and risks are taken into account. Despite the recent US$1b credit facility that could support further acquisitions, the current P/E already reflects a full view of the company rather than a clear discount.

On the P/E multiple, ExlService Holdings looks roughly fairly valued compared with both its own fundamentals and the wider Professional Services industry.

See what the numbers say about this price — find out in our valuation breakdown.

The ExlService Holdings Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for ExlService Holdings aim to close the loop on the valuation puzzle by spelling out which future paths for growth, margins and earnings would need to hold for the stock to be worth materially more or less than today's price. These narratives sit on Simply Wall St's Community page, and each one links its number to a specific view on how ExlService Holdings' growth, profitability and risks could evolve, which you can revisit as new information emerges.