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SYKE or ADP: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Outsourcing stocks are likely familiar with Sykes Enterprises (SYKE) and Automatic Data Processing (ADP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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, Sykes Enterprises is sporting a Zacks Rank of #2 (Buy), while Automatic Data Processing has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SYKE is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

SYKE currently has a forward P/E ratio of 14.70, while ADP has a forward P/E of 26.38. We also note that SYKE has a PEG ratio of 1.47. 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. ADP currently has a PEG ratio of 2.03.

Another notable valuation metric for SYKE is its P/B ratio of 1.52. 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, ADP has a P/B of 13.10.

These are just a few of the metrics contributing to SYKE's Value grade of A and ADP's Value grade of D.

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


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Sykes Enterprises, Incorporated (SYKE) : Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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