Investors with an interest in Outsourcing stocks have likely encountered both TTEC Holdings (TTEC - Free Report) and 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.
Currently, both TTEC Holdings and Paychex are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TTEC currently has a forward P/E ratio of 18.20, while PAYX has a forward P/E of 23.86. We also note that TTEC has a PEG ratio of 2.28. 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 2.81.
Another notable valuation metric for TTEC is its P/B ratio of 4.14. 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 10.22.
These metrics, and several others, help TTEC earn a Value grade of A, while PAYX has been given a Value grade of D.
Both TTEC and PAYX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TTEC is the superior value option right now.