BBSI vs. PAYX: Which Stock Is the Better Value Option?
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 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Barrett Business Services has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold). This means that BBSI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 15.38, while PAYX has a forward P/E of 25.91. We also note that BBSI has a PEG ratio of 1.10. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PAYX currently has a PEG ratio of 3.31.
Another notable valuation metric for BBSI is its P/B ratio of 4.39. 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 12.48.
Based on these metrics and many more, BBSI holds a Value grade of A, while PAYX has a Value grade of D.
BBSI sticks out from PAYX in both our Zacks Rank and Style Scores models, so value investors will likely feel that BBSI is the better option right now.
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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
