Yahoo Finance BBSI vs. PAYX: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Outsourcing sector might want to consider either Barrett Business Services (BBSI) or Paychex (PAYX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Barrett Business Services is sporting a Zacks Rank of #2 (Buy), while Paychex 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 BBSI has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
BBSI currently has a forward P/E ratio of 15.65, while PAYX has a forward P/E of 26.70. We also note that BBSI has a PEG ratio of 1.12. 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. PAYX currently has a PEG ratio of 3.68.
Another notable valuation metric for BBSI is its P/B ratio of 4.29. 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, PAYX has a P/B of 12.07.
These metrics, and several others, help BBSI earn a Value grade of A, while PAYX has been given a Value grade of C.
BBSI stands above PAYX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BBSI is the superior value option right now.
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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
