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PSN or PAY: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Technology Services sector have probably already heard of Parsons (PSN - Free Report) and Paymentus (PAY - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Parsons is sporting a Zacks Rank of #2 (Buy), while Paymentus has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PSN is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PSN currently has a forward P/E ratio of 23.31, while PAY has a forward P/E of 209.25. We also note that PSN has a PEG ratio of 1.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PAY currently has a PEG ratio of 16.32.

Another notable valuation metric for PSN is its P/B ratio of 2.24. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PAY has a P/B of 3.49.

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

PSN sticks out from PAY in both our Zacks Rank and Style Scores models, so value investors will likely feel that PSN is the better option right now.


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