Investors interested in Outsourcing stocks are likely familiar with Atento (ATTO - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Atento has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ATTO has an improving earnings outlook. However, value investors will care about much more than just this.
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.
ATTO currently has a forward P/E ratio of 15.16, while PAYX has a forward P/E of 27.88. We also note that ATTO has a PEG ratio of 1.52. 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 3.98.
Another notable valuation metric for ATTO is its P/B ratio of 0.92. 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, PAYX has a P/B of 12.07.
These metrics, and several others, help ATTO earn a Value grade of A, while PAYX has been given a Value grade of D.
ATTO sticks out from PAYX in both our Zacks Rank and Style Scores models, so value investors will likely feel that ATTO is the better option right now.