Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Professional 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 Professional 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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7 Undervalued Professional Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Professional Services industry for Tuesday, October 22, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Professional 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., together with its subsidiaries, provides consulting, managed services, and professional workforce solutions in the United States. It operates in two segments, Property Management and Professional. The Property Management segment offers office and maintenance field talent to various apartment communities and commercial buildings. The Professional segment provides skilled IT professionals in SAP, Workday, Peoplesoft, Hyperion, Oracle, One Stream, cyber, project management, management services, and other IT workforce solutions. This segment also offers finance, accounting, legal, human resource, and related support personnel. It serves its products to fortune 500 companies, and medium and small companies, as well as consulting companies. The company was formerly known as BG Staffing, Inc. and changed its name to BGSF, Inc. in February 2021. BGSF, Inc. was incorporated in 2007 and is based in Plano, Texas.

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 67, which is considered to be undervalued.

When you look at BGSF, Inc.’s price-to-sales ratio at 0.30 compared to the industry median at 1.37, 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 42.40 compared to the industry median at 30.10. This means it has a higher share price relative to earnings compared to its peers. This could make BGSF, Inc. less attractive for value investors.

Now, let’s assess BGSF, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 9.1, when compared to the industry median of 13.9, 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 lower than its industry median ratio of 0.45%. 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 3.12. 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 22.90. 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.

Earlyworks Co., Ltd’s Value Grade

Value Grade:

Earlyworks Co., Ltd operates as a blockchain-based technology company in Japan. The company builds products, deliver services, and develop solutions based on its proprietary Grid Ledger System to utilize blockchain technology in various business settings, including advertisement tracking, online visitor management, and sales of non-fungible tokens (NFT). It also offers software and system development; and consulting and solution services. In addition, the company develops NFT trading platforms and sells NFTs. The company serves the information technology, metaverse, advertisement, real estate, telecommunication, and entertainment industries. Earlyworks Co., Ltd was incorporated in 2018 and is headquartered in Tokyo, Japan.

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.

Earlyworks Co., Ltd has a Value Score of 100, which is considered to be undervalued.

Earlyworks Co., Ltd’s price-to-book ratio is higher than its peers. This could make Earlyworks Co., Ltd less attractive for value investors when compared to the industry median at 3.12.

You can read more about Earlyworks Co., Ltd’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.

Hudson Global, Inc.’s Value Grade

Value Grade:

Hudson Global, Inc. provides talent solutions for mid-to-large-cap multinational companies and government agencies under the Hudson RPO brand in the Americas, the Asia Pacific, and Europe. It offers recruitment process outsourcing (RPO) services, such as recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting for clients' permanent staff hires; and RPO contracting services, including outsourced professional contract staffing and managed services. The company was formerly known as Hudson Highland Group, Inc. and changed its name to Hudson Global, Inc. in April 2012. Hudson Global, Inc. was founded in 1999 and is headquartered in Old Greenwich, Connecticut.

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.

Hudson Global, Inc. has a Value Score of 92, which is considered to be undervalued.

Hudson Global, Inc.’s price-to-book ratio is higher than its peers. This could make Hudson Global, Inc. less attractive for value investors when compared to the industry median at 3.12.

You can read more about Hudson Global, 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.

TaskUs, Inc.’s Value Grade

Value Grade:

TaskUs, Inc. provides digital outsourcing services for companies in Philippines, the United States, India, and internationally. It offers digital customer experience that consists of omni-channel customer care services primarily delivered through non-voice digital channels; and other solutions, including experience and customer care services for new product or market launches, and customer acquisition solutions. The company also provides trust and safety solutions, such as review and disposition of user and advertiser generated visual, text, and audio content, which include removal or labeling of policy violating, and offensive or misleading content, as well as risk management, compliance, identity management, and fraud services; and artificial intelligence (AI) solutions that consist of data labeling, annotation, context relevance, and transcription services for training and tuning machine learning algorithms that enables to develop AI systems. It serves clients in various industry segments comprising e-commerce, FinTech, food delivery and ride sharing, gaming, technology, HealthTech, social media, and streaming media. The company was formerly known as TU TopCo, Inc. and changed its name to TaskUs, Inc. in December 2020. TaskUs, Inc. was founded in 2008 and is headquartered in New Braunfels, Texas.

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.

TaskUs, Inc. has a Value Score of 74, which is considered to be undervalued.

TaskUs, Inc.’s price-earnings ratio is 21.9 compared to the industry median at 30.1. This means that it has a lower price relative to its earnings compared to its peers. This makes TaskUs, Inc. more attractive for value investors.

TaskUs, Inc.’s price-to-book ratio is higher than its peers. This could make TaskUs, Inc. less attractive for value investors when compared to the industry median at 3.12.

You can read more about TaskUs, 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.

VCI Global Limited’s Value Grade

Value Grade:

VCI Global Limited, together with its subsidiaries, provides business and technology consulting services in Malaysia. The company offers business strategy consultancy services, including listing solutions, investors relations, and boardroom strategies consultancy. It also provides technology consultancy services and solutions, such as digital development, fintech solution, and software solutions. In addition, the company engages in corporate and business advisory services in corporate finance, corporate structuring and restructuring, equity investment, and merger and acquisition; listings on recognized stock exchanges; fintech advisory; technology development; and computer software programming. Further, it is involved in provision of artificial intelligence; image processing; communication; networking and process control software services; money lending services; education and training services; real estate management consultancy services; and leasing and operational management of resort properties. The company serves its products to small-medium enterprises and government-linked agencies, as well as to publicly traded conglomerates across various industries. VCI Global Limited was founded in 2013 and is headquartered in Kuala Lumpur, Malaysia.

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.

VCI Global Limited has a Value Score of 86, which is considered to be undervalued.

VCI Global Limited’s price-earnings ratio is 0.6 compared to the industry median at 30.1. This means that it has a lower price relative to its earnings compared to its peers. This makes VCI Global Limited more attractive for value investors.

VCI Global Limited’s price-to-book ratio is higher than its peers. This could make VCI Global Limited less attractive for value investors when compared to the industry median at 3.12.

You can read more about VCI Global Limited’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.

WNS (Holdings) Limited’s Value Grade

Value Grade:

WNS (Holdings) Limited, a business process management (BPM) company, provides data, voice, analytical, and business transformation services worldwide. The company operates through TSLU, MRHP, HCLS, and BFSI segments. It engages in diversified business, including manufacturing, retail, consumer packaged goods, media and entertainment, and telecommunication; travel and leisure, utilities, shipping, and logistics; healthcare and life sciences; banking, financial services, and insurance; and Hi-tech and professional services, as well as procurement. In addition, the company provides a range of services, such as finance and accounting, customer experience, research and analytics, technology, legal, and human resources outsourcing services. Further, it offers digital transformation and consulting services designed to allow its clients to enhance productivity, manage changes in the business environment, and leverage business knowledge to increase market competitiveness. Additionally, the company provides claims handling and repair management services for automobile repairs through a network of third-party repair centers, as well as accident management services. WNS (Holdings) Limited was founded in 1996 and is based in Mumbai, India.

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.

WNS (Holdings) Limited has a Value Score of 62, which is considered to be undervalued.

WNS (Holdings) Limited’s price-earnings ratio is 18.3 compared to the industry median at 30.1. This means that it has a lower price relative to its earnings compared to its peers. This makes WNS (Holdings) Limited more attractive for value investors.

WNS (Holdings) Limited’s price-to-book ratio is higher than its peers. This could make WNS (Holdings) Limited less attractive for value investors when compared to the industry median at 3.12.

You can read more about WNS (Holdings) Limited’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.

Exela Technologies, Inc.’s Value Grade

Value Grade:

Exela Technologies, Inc. provides transaction processing solutions, enterprise information management, document management, and digital business process services worldwide. It operates in three segments: Information & Transaction Processing Solutions (ITPS), Healthcare Solutions (HS), and Legal & Loss Prevention Services (LLPS). The ITPS segment provides lending solutions for mortgages and auto loans; banking solutions for clearing, anti-money laundering, sanctions, and interbank cross-border settlement; property and casualty insurance solutions for origination, enrollments, claims processing, and benefits administration communications; and public sector solutions for income tax processing, benefits administration, and records management. It also offers solutions for payment processing and reconciliation, integrated receivable and payables management, document logistics and location services, records management, and electronic storage of data and documents; and software, hardware, professional, and maintenance services related to information and transaction processing automation. Its HS segment provides revenue cycle solutions, integrated accounts payable and accounts receivable, and information management; claims processing, and claims adjudication and auditing services; enrollment processing and policy management services; scheduling and prescription management services; and medical coding and insurance claim generation, underpayment audit and recovery, and medical records management services. The LLPS segment processes legal claims for class action and mass action settlement administrations, involving project management support, notification, and outreach to claimants; and collects, analyzes, and distributes settlement funds. It also offers data and analytical services in the areas of litigation consulting, economic and statistical analysis, expert witness services, and revenue recovery services for delinquent accounts receivable. The company was incorporated in 2014 and is headquartered in Irving, Texas.

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.

Exela Technologies, Inc. has a Value Score of 80, which is considered to be undervalued.

You can read more about Exela Technologies, 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 Professional 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 Professional Services stocks as well as other industrys.

Choosing Which of the 7 Best Professional 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 B.
• Earlyworks Co., Ltd stock has a Value Grade of A.
• Hudson Global, Inc. stock has a Value Grade of A.
• TaskUs, Inc. stock has a Value Grade of B.
• VCI Global Limited stock has a Value Grade of A.
• WNS (Holdings) Limited stock has a Value Grade of B.
• Exela Technologies, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 undervalued stocks in the Professional 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 Professional Services Stocks

Want to learn more about Professional 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.

• 7 Undervalued Professional Services Stocks for Tuesday, October 22
• 5 Undervalued Professional Services Stocks for Monday, October 21
• 5 Undervalued Professional Services Stocks for Friday, October 18
• 5 Undervalued Professional Services Stocks for Thursday, October 17

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.