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BBSI vs. PAYX: Which Stock Is the Better Value Option?

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Investors with an interest in Outsourcing stocks have likely encountered both Barrett Business Services (BBSI - Free Report) and Paychex (PAYX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Barrett Business Services has a Zacks Rank of #2 (Buy), while Paychex has a Zacks Rank of #3 (Hold) right now. 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 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.

BBSI currently has a forward P/E ratio of 17.38, while PAYX has a forward P/E of 25.10. We also note that BBSI has a PEG ratio of 1.16. 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. PAYX currently has a PEG ratio of 3.31.

Another notable valuation metric for BBSI is its P/B ratio of 4.54. 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, PAYX has a P/B of 11.86.

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

BBSI sticks out from PAYX in both our Zacks Rank and Style Scores models, so value investors will likely feel that BBSI is the better option right now.


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Paychex, Inc. (PAYX) - free report >>

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