Financial Contrast: TrueBlue (NYSE:TBI) vs. Paychex (NASDAQ:PAYX)

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

Institutional and Insider Ownership

97.2% of TrueBlue shares are owned by institutional investors. Comparatively, 83.5% of Paychex shares are owned by institutional investors. 8.0% of TrueBlue shares are owned by company insiders. Comparatively, 0.6% of Paychex shares are owned 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 TrueBlue and Paychex”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TrueBlue	$1.62 billion	0.18	-$47.96 million	($1.88)	-4.97
Paychex	$6.51 billion	6.45	$1.76 billion	$5.04	23.42

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for TrueBlue and Paychex, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TrueBlue	1	1	1	0	2.00
Paychex	2	13	2	1	2.11

TrueBlue presently has a consensus price target of $7.75, suggesting a potential downside of 17.01%. Paychex has a consensus price target of $127.59, suggesting a potential upside of 8.09%. Given Paychex’s stronger consensus rating and higher probable upside, analysts plainly believe Paychex is more favorable than TrueBlue.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TrueBlue	-3.35%	-6.26%	-2.65%
Paychex	27.35%	52.78%	12.29%

Volatility and Risk

TrueBlue has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500. Comparatively, Paychex has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Summary

Paychex beats TrueBlue on 11 of the 14 factors compared between the two stocks.

About TrueBlue

TrueBlue, Inc., together with its subsidiaries, provides specialized workforce solutions in the United States, Canada, the United Kingdom, Australia, and Puerto Rico. It operates through three segments: PeopleReady, PeopleManagement, and PeopleScout. The company PeopleReady segment provides general, industrial, and skilled trade contingent staffing services for construction, transportation, manufacturing, retail, hospitality, and renewable energy industries. The PeopleManagement segment offers contingent, on-site industrial staffing, and commercial driver services, which includes on-site management and recruitment for the contingent industrial workforce of manufacturing, warehousing, and distribution facilities; and recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries under the Staff Management, SIMOS Insourcing Solutions, and Centerline Drivers brands. The company PeopleScout segment provides recruitment process outsourcing, talent advisory services, and managed service provider solutions including sourcing, screening, hiring, and onboarding services; operates Affinix, a technology platform for sourcing, screening, and delivering a permanent workforce to its clients; talent advisory services, such as employer branding, recruitment marketing, talent insights, diversity, equity and inclusion consulting, candidate assessment, and talent acquisition strategy consulting services; and contingent labor programs including vendor selection, performance management, compliance monitoring, and risk management. TrueBlue, Inc. was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. The company was incorporated in 1985 and is headquartered in Tacoma, Washington.

About Paychex

Paychex, Inc., together with its subsidiaries, provides integrated human capital management solutions (HCM) for payroll, benefits, human resources (HR), and insurance services for small to medium-sized businesses in the United States, Europe, and India. It offers payroll processing services; payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. The company also provides HR solutions, including integrated HCM technology solutions and HR advisory services through both virtual and on-site availability of a professionally trained HR representative, as well as HR support to non-payroll clients through its HR Partner Plus solution; and retirement services administration, such as 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, it offers cloud-based HR administration software products for employee benefits management and administration, time and attendance, digital communication solutions, recruiting, and onboarding solutions; plan administration outsourcing and state unemployment insurance services; various business services to small to medium-sized businesses comprising payroll funding and outsourcing services, which include payroll processing, invoicing, and tax preparation; and payment processing services, financial fitness programs, and a small-business loan resource center. Further, the company provides insurance services for property and casualty coverage, such as workers’ compensation, business-owner policies, cyber security protection, and commercial auto, as well as health and benefits coverage, including health, dental, vision, and life. It markets and sells its services primarily through its direct sales force. The company was founded in 1971 and is headquartered in Rochester, New York.