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

Zacks Equity Research
·2 min read

Investors looking for stocks in the Outsourcing sector might want to consider either Sykes Enterprises (SYKE) or Automatic Data Processing (ADP). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Sykes Enterprises has a Zacks Rank of #1 (Strong Buy), while Automatic Data Processing has a Zacks Rank of #4 (Sell) right now. This means that SYKE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SYKE currently has a forward P/E ratio of 14.16, while ADP has a forward P/E of 27.39. We also note that SYKE has a PEG ratio of 1.77. 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 2.28.

Another notable valuation metric for SYKE is its P/B ratio of 1.55. 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 10.32.

These metrics, and several others, help SYKE earn a Value grade of B, while ADP has been given a Value grade of C.

SYKE has seen stronger estimate revision activity and sports more attractive valuation metrics than ADP, so it seems like value investors will conclude that SYKE is the superior 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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Zacks Investment Research