Financial Survey: Heidrick & Struggles International (HSII) & Paychex (PAYX)
Heidrick & Struggles International (NASDAQ: HSII) and Paychex (NASDAQ:PAYX) are both business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, dividends, risk, institutional ownership, analyst recommendations, earnings and profitabiliy.
Valuation and Earnings
This table compares Heidrick & Struggles International and Paychex’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Heidrick & Struggles International||$592.21 million||0.69||$56.79 million||$0.78||27.95|
|Paychex||$3.11 billion||6.94||$1.34 billion||$2.15||27.95|
Paychex has higher revenue and earnings than Heidrick & Struggles International. Paychex is trading at a lower price-to-earnings ratio than Heidrick & Struggles International, indicating that it is currently the more affordable of the two stocks.
Heidrick & Struggles International pays an annual dividend of $0.52 per share and has a dividend yield of 2.4%. Paychex pays an annual dividend of $1.84 per share and has a dividend yield of 3.1%. Heidrick & Struggles International pays out 66.7% of its earnings in the form of a dividend. Paychex pays out 85.6% 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 6 consecutive years. Paychex is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Heidrick & Struggles International has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, Paychex has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.
This table compares Heidrick & Struggles International and Paychex’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Heidrick & Struggles International||2.41%||8.26%||3.99%|
Institutional and Insider Ownership
86.4% of Heidrick & Struggles International shares are held by institutional investors. Comparatively, 68.5% of Paychex shares are held by institutional investors. 2.4% of Heidrick & Struggles International shares are held by insiders. Comparatively, 11.6% of Paychex shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a summary of recent recommendations and price targets for Heidrick & Struggles International and Paychex, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Heidrick & Struggles International||0||1||0||0||2.00|
Heidrick & Struggles International presently has a consensus price target of $27.00, indicating a potential upside of 23.85%. Paychex has a consensus price target of $58.85, indicating a potential downside of 2.06%. Given Heidrick & Struggles International’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Heidrick & Struggles International is more favorable than Paychex.
Paychex beats Heidrick & Struggles International on 11 of the 17 factors compared between the two stocks.
Heidrick & Struggles International Company Profile
Heidrick & Struggles International, Inc. is an advisory firm providing executive search, leadership consulting and culture shaping services to businesses and business leaders around the world. Its segments include Executive Search, Leadership Consulting and Culture Shaping. It operates its executive search services in three geographic regions: the Americas (which includes the countries in North and South America); Europe (which includes the continents of Europe and Africa), and Asia Pacific (which includes Asia and the region generally known as the Middle East). Its Leadership Consulting segment operates globally. Its Culture Shaping segment operates in the Americas and Europe. In addition to executive search, it provides leadership consulting expertise and culture shaping services including executive leadership assessment; leadership, team and board development; succession planning; talent strategy; people performance; inter-team collaboration, and organizational transformation.
Paychex Company Profile
Paychex, Inc. is a provider of integrated human capital management (HCM) solutions for payroll, human resource (HR), retirement and insurance services for small- to medium-sized businesses in the United States. The Company also has operations in Germany. The Company offers services, including Payroll processing, Human Resource Services, and Accounting and Financial Services. As of May 31, 2016, the Company serviced approximately 605,000 payroll clients. It offers a portfolio of HCM services and products that allows its clients to meet their payroll and HR needs. Its payroll-related ancillary services and human resource service (HRS) offerings often leverage the information gathered in the base payroll processing service, allowing it to provide outsourcing services covering the HCM spectrum. The Company, through its HCM software-as-a-service platform, Paychex Flex, provides an integrated product suite that covers the employee life cycle from recruiting and hiring to retirement.
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