CGEMY or PAYX: Which Is the Better Value Stock Right Now?

Zacks Equity Research
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Investors interested in Outsourcing stocks are likely familiar with Cap Gemini SA (CGEMY) and Paychex (PAYX). 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.

Cap Gemini SA and Paychex are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CGEMY has an improving earnings outlook. But this is only part of the picture 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.

CGEMY currently has a forward P/E ratio of 15.32, while PAYX has a forward P/E of 25.80. We also note that CGEMY has a PEG ratio of 1.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PAYX currently has a PEG ratio of 3.44.

Another notable valuation metric for CGEMY is its P/B ratio of 3.10. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PAYX has a P/B of 12.34.

Based on these metrics and many more, CGEMY holds a Value grade of B, while PAYX has a Value grade of D.

CGEMY stands above PAYX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CGEMY is the superior value option right now.

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Cap Gemini SA (CGEMY) : Free Stock Analysis Report

Paychex, Inc. (PAYX) : Free Stock Analysis Report

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