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SYKE vs. PAYX: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Outsourcing sector might want to consider either Sykes Enterprises or Paychex (PAYX - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Sykes Enterprises and Paychex have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SYKE currently has a forward P/E ratio of 14.74, while PAYX has a forward P/E of 24.45. We also note that SYKE has a PEG ratio of 1.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PAYX currently has a PEG ratio of 2.98.

Another notable valuation metric for SYKE is its P/B ratio of 1.60. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PAYX has a P/B of 12.26.

These metrics, and several others, help SYKE earn a Value grade of A, while PAYX has been given a Value grade of F.

Both SYKE and PAYX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SYKE is the superior value option right now.


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