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BBSI vs. PAYX: Which Stock Is the Better Value Option?
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Investors with an interest in Outsourcing stocks have likely encountered both Barrett Business Services (BBSI - Free Report) and 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, Barrett Business Services has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). This means that BBSI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BBSI currently has a forward P/E ratio of 15.74, while PAYX has a forward P/E of 25.40. We also note that BBSI has a PEG ratio of 1.12. 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. PAYX currently has a PEG ratio of 3.37.
Another notable valuation metric for BBSI is its P/B ratio of 4.07. 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 11.48.
These metrics, and several others, help BBSI earn a Value grade of A, while PAYX has been given a Value grade of D.
BBSI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BBSI is likely the superior value option right now.
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BBSI vs. PAYX: Which Stock Is the Better Value Option?
Investors with an interest in Outsourcing stocks have likely encountered both Barrett Business Services (BBSI - Free Report) and 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, Barrett Business Services has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). This means that BBSI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BBSI currently has a forward P/E ratio of 15.74, while PAYX has a forward P/E of 25.40. We also note that BBSI has a PEG ratio of 1.12. 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. PAYX currently has a PEG ratio of 3.37.
Another notable valuation metric for BBSI is its P/B ratio of 4.07. 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 11.48.
These metrics, and several others, help BBSI earn a Value grade of A, while PAYX has been given a Value grade of D.
BBSI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BBSI is likely the superior value option right now.