Analyzing PRGX Global (PRGX) and Paychex (PAYX)

PRGX Global (NASDAQ: PRGX) and Paychex (NASDAQ:PAYX) are both business services companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, earnings and valuation.

Dividends

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Paychex pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. PRGX Global does not pay a dividend. Paychex pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Paychex has raised its dividend for 7 consecutive years.

Profitability

This table compares PRGX Global and Paychex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PRGX Global 1.97% 5.65% 2.90%
Paychex 27.22% 43.42% 11.86%

Risk and Volatility

PRGX Global has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500. Comparatively, Paychex has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for PRGX Global and Paychex, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PRGX Global 0 0 2 0 3.00
Paychex 0 12 1 0 2.08

PRGX Global presently has a consensus price target of $9.50, indicating a potential downside of 1.04%. Paychex has a consensus price target of $64.94, indicating a potential upside of 5.57%. Given Paychex’s higher possible upside, analysts clearly believe Paychex is more favorable than PRGX Global.

Earnings & Valuation

This table compares PRGX Global and Paychex’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PRGX Global $161.62 million 1.33 $3.18 million $0.21 45.71
Paychex $3.15 billion 7.01 $817.30 million $2.20 27.96

Paychex has higher revenue and earnings than PRGX Global. Paychex is trading at a lower price-to-earnings ratio than PRGX Global, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

71.0% of PRGX Global shares are owned by institutional investors. Comparatively, 68.7% of Paychex shares are owned by institutional investors. 15.0% of PRGX Global shares are owned by company insiders. Comparatively, 11.7% of Paychex shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Paychex beats PRGX Global on 11 of the 17 factors compared between the two stocks.

About PRGX Global

PRGX Global, Inc., together with its subsidiaries, provides recovery audit services to businesses and government agencies having payment transactions and procurement environments. It operates through three segments: Recovery Audit Services ? Americas, Recovery Audit Services – Europe/Asia-Pacific, and Adjacent Services. The company's recovery audit services are based on the mining of clients' purchasing related data for overpayments to the third-party suppliers. It also offers adjacent recovery services comprising advisory, analytics, and supplier information management (SIM) services, as well as PRGX OPTIX suite of analytics tools. The company serves retailers, such as discount, department, specialty, grocery, and drug stores, as well as wholesalers; business enterprises, including manufacturers, financial services firms, pharmaceutical companies, and resource companies, such as oil and gas companies; and federal and state government agencies. PRGX Global, Inc. was founded in 1990 and is headquartered in Atlanta, Georgia.

About Paychex

Paychex, Inc. provides payroll, human resource (HR), retirement, and insurance services for small to medium-sized businesses in the United States and Germany. The company offers payroll processing services that include payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. It also provides HR outsourcing services, such as Paychex HR solutions comprising payroll, employer compliance, HR and employee benefits administration, risk management outsourcing, and the on-site availability of a professionally trained HR representative; and retirement services administration, including plan implementation, ongoing compliance with government regulations, employee and employer reporting, participant and employer online access, electronic funds transfer, and other administrative services. In addition, the company offers insurance services for property and casualty coverage, such as workers' compensation, business-owner policies, commercial auto, and health and benefits coverage, including health, dental, vision, and life; cloud-based HR administration software products for employee benefits management and administration, time and attendance, and recruiting solutions; and other HR services and products, such as employee handbooks, management manuals, and personnel and required regulatory forms. Further, it provides various accounting and financial services to small to medium-sized businesses comprising payroll funding and outsourcing services, which include payroll processing, invoicing, and tax preparation; and various services, such as payment processing services, financial fitness programs, and a small-business loan resource center. Paychex, Inc. markets its products and services through direct sales force. The company was founded in 1979 and is headquartered in Rochester, New York.

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