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Are Investors Undervaluing Adecco (AHEXY) Right Now?
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Adecco (AHEXY - Free Report) . AHEXY is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.72, which compares to its industry's average of 14.97. Over the past year, AHEXY's Forward P/E has been as high as 12.18 and as low as 6.87, with a median of 9.58.
We also note that AHEXY holds a PEG ratio of 1.19. 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. AHEXY's PEG compares to its industry's average PEG of 1.70. Over the last 12 months, AHEXY's PEG has been as high as 4.56 and as low as 0.67, with a median of 1.06.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AHEXY has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.61.
Barrett Business Services (BBSI - Free Report) may be another strong Outsourcing stock to add to your shortlist. BBSI is a Zacks Rank of #2 (Buy) stock with a Value grade of A.
Barrett Business Services is trading at a forward earnings multiple of 19.67 at the moment, with a PEG ratio of 1.40. This compares to its industry's average P/E of 14.97 and average PEG ratio of 1.70.
Over the last 12 months, BBSI's P/E has been as high as 21.77, as low as 16.13, with a median of 18.76, and its PEG ratio has been as high as 1.48, as low as 1.08, with a median of 1.30.
Barrett Business Services sports a P/B ratio of 5.34 as well; this compares to its industry's price-to-book ratio of 5.73. In the past 52 weeks, BBSI's P/B has been as high as 5.60, as low as 4.32, with a median of 4.95.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Adecco and Barrett Business Services are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AHEXY and BBSI feels like a great value stock at the moment.
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Are Investors Undervaluing Adecco (AHEXY) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Adecco (AHEXY - Free Report) . AHEXY is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.72, which compares to its industry's average of 14.97. Over the past year, AHEXY's Forward P/E has been as high as 12.18 and as low as 6.87, with a median of 9.58.
We also note that AHEXY holds a PEG ratio of 1.19. 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. AHEXY's PEG compares to its industry's average PEG of 1.70. Over the last 12 months, AHEXY's PEG has been as high as 4.56 and as low as 0.67, with a median of 1.06.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AHEXY has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.61.
Barrett Business Services (BBSI - Free Report) may be another strong Outsourcing stock to add to your shortlist. BBSI is a Zacks Rank of #2 (Buy) stock with a Value grade of A.
Barrett Business Services is trading at a forward earnings multiple of 19.67 at the moment, with a PEG ratio of 1.40. This compares to its industry's average P/E of 14.97 and average PEG ratio of 1.70.
Over the last 12 months, BBSI's P/E has been as high as 21.77, as low as 16.13, with a median of 18.76, and its PEG ratio has been as high as 1.48, as low as 1.08, with a median of 1.30.
Barrett Business Services sports a P/B ratio of 5.34 as well; this compares to its industry's price-to-book ratio of 5.73. In the past 52 weeks, BBSI's P/B has been as high as 5.60, as low as 4.32, with a median of 4.95.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Adecco and Barrett Business Services are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AHEXY and BBSI feels like a great value stock at the moment.