Investors with an interest in Consulting Services stocks have likely encountered both CBIZ (CBZ) and Equifax (EFX). 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.
CBIZ and Equifax are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CBZ has an improving earnings 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.
CBZ currently has a forward P/E ratio of 13.17, while EFX has a forward P/E of 20.79. We also note that CBZ has a PEG ratio of 1.32. 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. EFX currently has a PEG ratio of 1.85.
Another notable valuation metric for CBZ is its P/B ratio of 1.59. 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, EFX has a P/B of 4.62.
Based on these metrics and many more, CBZ holds a Value grade of A, while EFX has a Value grade of C.
CBZ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CBZ is likely the superior value option right now.
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CBIZ, Inc. (CBZ): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).