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

Investors interested in stocks from the Outsourcing sector have probably already heard of 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.

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 and Automatic Data Processing are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. 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 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 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 12.53, while ADP has a forward P/E of 24.72. We also note that SYKE has a PEG ratio of 1.25. 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. ADP currently has a PEG ratio of 2.35.

Another notable valuation metric for SYKE is its P/B ratio of 1.43. 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 11.74.

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