CGEMY or PAYX: Which Is the Better Value Stock Right Now?
Investors with an interest in Outsourcing stocks have likely encountered both Cap Gemini SA (CGEMY) and Paychex (PAYX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Cap Gemini SA and Paychex are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle 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 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.
CGEMY currently has a forward P/E ratio of 16.42, while PAYX has a forward P/E of 26.58. We also note that CGEMY has a PEG ratio of 1.36. 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 3.54.
Another notable valuation metric for CGEMY is its P/B ratio of 3.22. 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, PAYX has a P/B of 12.71.
Based on these metrics and many more, CGEMY holds a Value grade of A, while PAYX has a Value grade of C.
Both CGEMY and PAYX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CGEMY is the superior value option right now.
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Cap Gemini SA (CGEMY) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
