Paychex (NASDAQ: PAYX) and CDI Corporation (NYSE:CDI) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their profitabiliy, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Profitability

This table compares Paychex and CDI Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Paychex 25.93% 42.65% 12.55%
CDI Corporation -4.10% -7.85% -4.84%

Analyst Ratings

This is a summary of current ratings and target prices for Paychex and CDI Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paychex 4 10 1 0 1.80
CDI Corporation 0 0 0 0 N/A

Paychex presently has a consensus target price of $59.16, suggesting a potential upside of 3.43%. Given Paychex’s higher possible upside, equities research analysts plainly believe Paychex is more favorable than CDI Corporation.

Dividends

Paychex pays an annual dividend of $1.84 per share and has a dividend yield of 3.2%. CDI Corporation does not pay a dividend. Paychex has raised its dividend for 6 consecutive years.

Institutional & Insider Ownership

68.5% of Paychex shares are owned by institutional investors. Comparatively, 46.3% of CDI Corporation shares are owned by institutional investors. 11.6% of Paychex shares are owned by company insiders. Comparatively, 8.8% of CDI Corporation 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.

Risk & Volatility

Paychex has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, CDI Corporation has a beta of 1.94, meaning that its stock price is 94% more volatile than the S&P 500.

Valuation and Earnings

This table compares Paychex and CDI Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Paychex $3.15 billion 6.53 $1.37 billion N/A N/A
CDI Corporation $818.41 million 0.14 -$8.17 million ($1.80) -3.47

Paychex has higher revenue and earnings than CDI Corporation.

Summary

Paychex beats CDI Corporation on 12 of the 13 factors compared between the two stocks.

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.

CDI Corporation Company Profile

CDI Corp. provides engineering, information technology and staffing solutions. The Company operates in three segments: Global Engineering and Technology Solutions (GETS), Professional Staffing Services (PSS) and Management Recruiters International (MRI). It provides staffing services through its MRINetwork of franchisees. The GETS segment provides engineering and information technology solutions that involve the production of deliverable work products or services performed at its facility or at a customer’s facility. The PSS segment provides technical and professional personnel for discrete periods of time to augment the customer’s workforce in times of project, seasonal, peak period or business cycle needs. The MRI segment is a global franchisor that does business as MRINetwork and provides the use of its trademarks, business systems and training and support services to its franchisees. It serves the oil, gas and chemicals, aerospace and industrial equipment, and hi-tech industries.

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