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G vs. PAYX: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Outsourcing sector might want to consider either Genpact (G - Free Report) or Paychex (PAYX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Genpact and Paychex are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

G currently has a forward P/E ratio of 15.65, while PAYX has a forward P/E of 29.43. We also note that G has a PEG ratio of 1.27. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PAYX currently has a PEG ratio of 3.92.

Another notable valuation metric for G is its P/B ratio of 4.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, PAYX has a P/B of 13.17.

These are just a few of the metrics contributing to G's Value grade of B and PAYX's Value grade of D.

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


In-Depth Zacks Research for the Tickers Above


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Paychex, Inc. (PAYX) - free report >>

Genpact Limited (G) - free report >>

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