Yahoo Finance BBSI or PAYX: Which Is the Better Value Stock Right Now?
Investors with an interest in Outsourcing stocks have likely encountered both Barrett Business Services (BBSI) and Paychex (PAYX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Barrett Business Services and Paychex are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BBSI is likely seeing its earnings outlook improve to a greater extent. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BBSI currently has a forward P/E ratio of 16.76, while PAYX has a forward P/E of 25.16. We also note that BBSI has a PEG ratio of 1.20. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PAYX currently has a PEG ratio of 3.47.
Another notable valuation metric for BBSI is its P/B ratio of 4.60. 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 12.01.
These metrics, and several others, help BBSI earn a Value grade of A, while PAYX has been given a Value grade of C.
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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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
