BBSI vs. ADP: Which Stock Is the Better Value Option?
Investors interested in Outsourcing stocks are likely familiar with Barrett Business Services (BBSI) and Automatic Data Processing (ADP). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Barrett Business Services is sporting a Zacks Rank of #2 (Buy), while Automatic Data Processing has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BBSI has an improving earnings outlook. But this is only part of the picture 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 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 14.56, while ADP has a forward P/E of 27.59. We also note that BBSI has a PEG ratio of 1.21. 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 2.12.
Another notable valuation metric for BBSI is its P/B ratio of 4.22. 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, ADP has a P/B of 13.72.
These are just a few of the metrics contributing to BBSI's Value grade of A and ADP's Value grade of D.
BBSI stands above ADP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BBSI is the superior value option right now.
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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
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