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BBSI 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 Barrett Business Services (BBSI - Free Report) or Paychex (PAYX - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Barrett Business Services has a Zacks Rank of #1 (Strong Buy), while Paychex has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BBSI has an improving earnings outlook. 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 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.

BBSI currently has a forward P/E ratio of 15.31, while PAYX has a forward P/E of 25.18. We also note that BBSI has a PEG ratio of 1.09. 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 3.21.

Another notable valuation metric for BBSI is its P/B ratio of 3.99. 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 11.92.

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

BBSI has seen stronger estimate revision activity and sports more attractive valuation metrics than PAYX, so it seems like value investors will conclude that BBSI is the superior option right now.


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

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