Financial Contrast: Forrester Research (FORR) and Paychex (PAYX)

Forrester Research (NASDAQ: FORR) and Paychex (NASDAQ:PAYX) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

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This is a summary of current ratings for Forrester Research and Paychex, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Forrester Research 0 0 0 0 N/A
Paychex 1 11 1 0 2.00

Paychex has a consensus price target of $64.94, indicating a potential upside of 7.74%. Given Paychex’s higher probable upside, analysts plainly believe Paychex is more favorable than Forrester Research.

Insider & Institutional Ownership

59.8% of Forrester Research shares are owned by institutional investors. Comparatively, 68.7% of Paychex shares are owned by institutional investors. 43.5% of Forrester Research shares are owned by insiders. Comparatively, 11.7% of Paychex shares are owned by 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.

Earnings and Valuation

This table compares Forrester Research and Paychex’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Forrester Research $337.67 million 2.41 $15.14 million $0.83 54.22
Paychex $3.15 billion 6.87 $817.30 million $2.20 27.40

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

Profitability

This table compares Forrester Research and Paychex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Forrester Research 4.48% 11.28% 4.65%
Paychex 27.22% 43.42% 11.86%

Dividends

Forrester Research pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Paychex pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. Forrester Research pays out 96.4% 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 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. Paychex is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Forrester Research has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500. Comparatively, Paychex has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500.

Summary

Paychex beats Forrester Research on 14 of the 16 factors compared between the two stocks.

About Forrester Research

Forrester Research, Inc. operates as an independent research, data, and advisory services company. It operates through Research, Product, and Project Consulting segments. Its primary syndicated research product is Research, which offers clients with access to its syndicated research designed to inform their strategic decision-making. The company's Research product offerings consist of cross-linked documents that interconnect the company's playbooks, reports, data, product rankings, best practices, evaluation tools, and research archives, which are provided through role-based Websites. It also offers leadership boards that are peer groups for executives and other senior leaders at large organizations. In addition, the company provides data products and services, including Customer Experience Index, a framework for assessing and measuring customer experience quality; Consumer Technographics that offers insights into how technology impacts the way consumers select, purchase, use, and communicate about products and services; Business Technographics, which provides assessments of what motivates businesses to choose certain technologies and vendors, as well as measures and reports on the current information consumption patterns of key influencers for large technology purchases; and ForecastView, an ongoing data program that provides a detailed evaluation of market size, based on expert analysis and quantitative insights from consumer and business surveys. Further, it offers consulting services to assist clients in developing and executing technology and business strategy, informing critical decisions, and reducing business risk, as well as hosts various events. The company sells its products and services through direct sales force in North America, Europe, Asia, and Australia; and through independent sales representatives in selected locations internationally. Forrester Research, Inc. was founded in 1983 and is headquartered in Cambridge, Massachusetts.

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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