Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Employment Services industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Employment Services Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Employment Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Employment Services industry for Friday, May 17, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Employment Services industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

BGSF Inc’s Value Grade

Value Grade:

BGSF, Inc. is a provider of consulting, managed services, and professional workforce solutions. The Company operates through two segments: Property Management and Professional. The Property Management segment is a provider of office and maintenance talent. It operates in 38 states and D.C. The Professional segment provides specialized talent and business consultants for information technology (IT), managed services, finance, accounting, legal and human resources. The segment operates across the United States in three divisions: IT, Managed Solutions, and Finance & Accounting, with the IT division providing additional nearshore and offshore solutions in Colombia and India. Its client partners include Fortune 500 companies, medium and small companies, as well as consulting firms engaged in systems integration projects. Its workforce services consist of on-demand or short-term assignments, consulting services, managed services and on-site management administration.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

BGSF Inc has a Value Score of 95, which is considered to be undervalued.

When you look at BGSF Inc’s price-to-sales ratio at 0.24 compared to the industry median at 0.73, this company has a lower price relative to revenue compared to its peers. This could make BGSF Inc’s stock more attractive for value investors.

BGSF Inc’s price-earnings ratio is 13.67 compared to the industry median at 22.94. This means it has a lower share price relative to earnings compared to its peers. This could make BGSF Inc more attractive for value investors.

Now, let’s assess BGSF Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 7.5, when compared to the industry median of 13.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. BGSF Inc’s shareholder yield is higher than its industry median ratio of 3.30%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. BGSF Inc’s price-to-book ratio is lower than its industry median ratio of 1.92. This could make BGSF Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BGSF Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BGSF Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 20.38. This could make BGSF Inc more attractive because the lower P/FCF ratio indicates that BGSF Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Cross Country Healthcare, Inc.’s Value Grade

Value Grade:

Cross Country Healthcare, Inc. is a technology-enabled workforce solution and advisory company. It operates through two segments: Nurse and Allied Staffing and Physician Staffing. The Nurse and Allied Staffing segment provides traditional staffing, recruiting, and value-added total talent solutions, including temporary and permanent placement of travel and local nurse and allied professionals, and healthcare leaders within nursing, allied, physician, and human resources; vendor neutral programs and managed service programs (MSP); education healthcare services; in-home care services; and outsourcing services. The Physician Staffing segment provides physicians in many specialties, as well as certified registered nurse anesthetists, nurse practitioners, and physician assistants as independent contractors on temporary assignments throughout the United States at various healthcare facilities, such as acute and non-acute care facilities, government facilities and managed care organizations.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cross Country Healthcare, Inc. has a Value Score of 96, which is considered to be undervalued.

Cross Country Healthcare, Inc.’s price-earnings ratio is 11.3 compared to the industry median at 22.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Cross Country Healthcare, Inc. more attractive for value investors.

Cross Country Healthcare, Inc.’s price-to-book ratio is higher than its peers. This could make Cross Country Healthcare, Inc. less attractive for value investors when compared to the industry median at 1.92.

You can read more about Cross Country Healthcare, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Mastech Digital Inc’s Value Grade

Value Grade:

Mastech Digital, Inc. is a provider of digital transformation information technology (IT) services. The Company offers data management and analytics solutions, digital learning, and IT staffing services with a digital first approach. The Company operates through two segments: Data and Analytics Services, and IT Staffing Services. Its Data and Analytics Services segment delivers specialized data management, data engineering, customer experience consulting, data analytics and cloud services to customers globally. Each of these services can be delivered using on-site and offshore resources. Its IT Staffing Services segment combines technical expertise with business process experience to deliver a broad range of services in digital and mainstream technologies. Its digital technology services include data management and analytics, cloud, mobility, social and automation. Its digital transformation services also include staffing and project-based services around digital learning.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mastech Digital Inc has a Value Score of 65, which is considered to be undervalued.

Mastech Digital Inc’s price-to-book ratio is higher than its peers. This could make Mastech Digital Inc less attractive for value investors when compared to the industry median at 1.92.

You can read more about Mastech Digital Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Employment Services Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Employment Services stocks as well as other industrys.

Choosing Which of the 3 Best Employment Services Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• BGSF Inc stock has a Value Grade of A.
• Cross Country Healthcare, Inc. stock has a Value Grade of A.
• Mastech Digital Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Employment Services industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Employment Services Stocks

Want to learn more about Employment Services stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Employment Services Stocks for Friday, May 17
• 3 Undervalued Employment Services Stocks for Wednesday, May 15
• 3 Undervalued Employment Services Stocks for Monday, May 13
• Why Kelly Services, Inc.’s (KELYA) Stock Is Down 4.18%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.