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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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify 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 #4 (Sell). 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. But this is just one piece of the puzzle for value investors.

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.

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 14.18, while ADP has a forward P/E of 29.25. We also note that SYKE has a PEG ratio of 1.42. 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. ADP currently has a PEG ratio of 2.44.

Another notable valuation metric for SYKE is its P/B ratio of 1.93. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ADP has a P/B of 12.15.

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

SYKE sticks out from ADP in both our Zacks Rank and Style Scores models, so value investors will likely feel that SYKE is the better 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