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PRGX vs. SPSC: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Business - Services sector might want to consider either PRGX Global or SPS Commerce (SPSC - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, PRGX Global is sporting a Zacks Rank of #1 (Strong Buy), while SPS Commerce has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PRGX likely has seen a stronger improvement to its earnings outlook than SPSC has recently. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

PRGX currently has a forward P/E ratio of 17.44, while SPSC has a forward P/E of 38.06. We also note that PRGX has a PEG ratio of 1.16. 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. SPSC currently has a PEG ratio of 2.54.

Another notable valuation metric for PRGX is its P/B ratio of 1.48. 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, SPSC has a P/B of 5.08.

Based on these metrics and many more, PRGX holds a Value grade of B, while SPSC has a Value grade of F.

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


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