U.S. markets open in 8 hours 55 minutes
  • S&P Futures

    3,755.25
    -10.25 (-0.27%)
     
  • Dow Futures

    30,801.00
    -77.00 (-0.25%)
     
  • Nasdaq Futures

    12,406.50
    -48.50 (-0.39%)
     
  • Russell 2000 Futures

    2,135.80
    -8.70 (-0.41%)
     
  • Crude Oil

    64.31
    +0.48 (+0.75%)
     
  • Gold

    1,689.80
    -10.90 (-0.64%)
     
  • Silver

    25.22
    -0.24 (-0.95%)
     
  • EUR/USD

    1.1965
    -0.0014 (-0.12%)
     
  • 10-Yr Bond

    1.5500
    -1.4700 (-100.00%)
     
  • Vix

    28.57
    -26.67 (-100.00%)
     
  • GBP/USD

    1.3889
    -0.0005 (-0.04%)
     
  • USD/JPY

    108.0360
    +0.0600 (+0.06%)
     
  • BTC-USD

    47,050.17
    -2,611.51 (-5.26%)
     
  • CMC Crypto 200

    939.83
    -47.38 (-4.80%)
     
  • FTSE 100

    6,650.88
    -24.59 (-0.37%)
     
  • Nikkei 225

    28,645.64
    -284.47 (-0.98%)
     

BBSI vs. PAYX: Which Stock Is the Better Value Option?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·2 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investors looking for stocks in the Outsourcing sector might want to consider either Barrett Business Services (BBSI) or Paychex (PAYX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Right now, Barrett Business Services is sporting a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BBSI likely has seen a stronger improvement to its earnings outlook than PAYX has recently. But this is just one piece of the puzzle 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.

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.

BBSI currently has a forward P/E ratio of 16.08, while PAYX has a forward P/E of 31.70. We also note that BBSI has a PEG ratio of 1.34. 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 3.96.

Another notable valuation metric for BBSI is its P/B ratio of 2.59. 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, PAYX has a P/B of 11.62.

Based on these metrics and many more, BBSI holds a Value grade of B, while PAYX has a Value grade of D.

BBSI stands above PAYX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BBSI is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
 
Paychex, Inc. (PAYX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.