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ATTO vs. ADP: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Outsourcing sector have probably already heard of Atento (ATTO) and Automatic Data Processing (ADP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, both Atento and Automatic Data Processing are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 5.39, while ADP has a forward P/E of 28.07. We also note that ATTO has a PEG ratio of 0.70. 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. ADP currently has a PEG ratio of 2.20.

Another notable valuation metric for ATTO is its P/B ratio of 0.91. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ADP has a P/B of 13.77.

Based on these metrics and many more, ATTO holds a Value grade of A, while ADP has a Value grade of C.

Both ATTO and ADP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATTO is the superior value option right now.


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Atento S.A. (ATTO) : Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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