Investors interested in stocks from the Outsourcing sector have probably already heard of Hudson Global (HSON) and Automatic Data Processing (ADP). But which of these two companies is the best option for those looking for undervalued stocks? Let’s 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.
Currently, Hudson Global has a Zacks Rank of #1 (Strong Buy), while Automatic Data Processing has a Zacks Rank of #2 (Buy). This means that HSON’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
HSON currently has a forward P/E ratio of 11.73, while ADP has a forward P/E of 29.92. We also note that HSON has a PEG ratio of 0.59. 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 2.49.
Another notable valuation metric for HSON is its P/B ratio of 2.18. 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 20.78.
These metrics, and several others, help HSON earn a Value grade of B, while ADP has been given a Value grade of C.
HSON stands above ADP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HSON is the superior value option right now.
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Hudson Global, Inc. (HSON) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
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