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SYKE vs. ADP: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors interested in Outsourcing stocks are likely familiar with Sykes Enterprises (SYKE) and 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Sykes Enterprises and Automatic Data Processing are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SYKE currently has a forward P/E ratio of 14.98, while ADP has a forward P/E of 29.49. We also note that SYKE has a PEG ratio of 1.87. 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 2.46.

Another notable valuation metric for SYKE is its P/B ratio of 1.76. 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 12.27.

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

Both SYKE and ADP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we 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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