HSON vs. ADP: Which Stock Is the Better Value Option?
Investors interested in stocks from the Outsourcing sector have probably already heard of Hudson Global (HSON) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Hudson Global has a Zacks Rank of #1 (Strong Buy), while Automatic Data Processing has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HSON has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HSON currently has a forward P/E ratio of 7.67, while ADP has a forward P/E of 27.51. We also note that HSON has a PEG ratio of 0.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ADP currently has a PEG ratio of 2.29.
Another notable valuation metric for HSON is its P/B ratio of 1.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ADP has a P/B of 21.25.
Based on these metrics and many more, HSON holds a Value grade of B, while ADP has a Value grade of C.
HSON has seen stronger estimate revision activity and sports more attractive valuation metrics than ADP, so it seems like value investors will conclude that HSON is the superior option right now.
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Hudson Global, Inc. (HSON) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
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