Paychex (PAYX) versus PRGX Global (PRGX) Financial Analysis

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

Analyst Ratings

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

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



Paychex presently has a consensus target price of $64.94, indicating a potential upside of 5.30%. PRGX Global has a consensus target price of $9.50, indicating a potential upside of 0.00%. Given Paychex’s higher probable upside, equities analysts clearly believe Paychex is more favorable than PRGX Global.

Volatility & Risk

Paychex has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, PRGX Global has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Dividends

Paychex pays an annual dividend of $2.00 per share and has a dividend yield of 3.2%. 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 increased its dividend for 7 consecutive years.

Institutional & Insider Ownership

68.7% of Paychex shares are held by institutional investors. Comparatively, 71.0% of PRGX Global shares are held by institutional investors. 11.7% of Paychex shares are held by company insiders. Comparatively, 15.0% of PRGX Global shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Paychex $3.15 billion 7.03 $817.30 million $2.20 28.03
PRGX Global $161.62 million 1.32 $3.18 million $0.21 45.24

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.

Profitability

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

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

Summary

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

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.

About PRGX Global

PRGX Global, Inc. (PRGX), together with its subsidiaries, provides recovery audit and spend analytics services. The Company provides recovery audit, procure-to-pay performance improvement, spend analytics and risk management services principally to large businesses and government agencies. The Company operates through three segments: Recovery Audit Services-Americas, Recovery Audit Services-Europe/Asia-Pacific and Adjacent Services. The Recovery Audit Services-Americas segment represents recovery audit services the Company provides in the United States, Canada and Latin America. The Recovery Audit Services-Europe/Asia-Pacific segment represents recovery audit services it provides in Europe, Asia and the Pacific region. The Adjacent Services segment includes spend analytics (data transformation and cost harmonization), Supplier Information Management (SIM) and Chartered Institute of Purchasing & Supply (CIPS) Sustainability Index (CSI).

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