Contrasting Paychex (NASDAQ:PAYX) and Forrester Research (NASDAQ:FORR)

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

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	-12.03%	4.99%	1.44%
Paychex	27.35%	52.78%	12.29%

Insider & Institutional Ownership

55.2% of Forrester Research shares are held by institutional investors. Comparatively, 83.5% of Paychex shares are held by institutional investors. 40.7% of Forrester Research shares are held by insiders. Comparatively, 0.6% of Paychex shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Forrester Research has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Paychex has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Valuation & Earnings

This table compares Forrester Research and Paychex”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Forrester Research	$396.89 million	0.46	-$119.36 million	($2.37)	-4.04
Paychex	$6.51 billion	6.32	$1.76 billion	$5.04	22.95

Paychex has higher revenue and earnings than Forrester Research. Forrester Research 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 for Forrester Research and Paychex, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Forrester Research	1	1	0	0	1.50
Paychex	2	13	2	1	2.11

Paychex has a consensus target price of $127.88, indicating a potential upside of 10.58%. Given Paychex’s stronger consensus rating and higher probable upside, analysts plainly believe Paychex is more favorable than Forrester Research.

Summary

Paychex beats Forrester Research on 12 of the 15 factors compared between the two stocks.

About Forrester Research

Forrester Research, Inc. operates as an independent research and advisory company in the United States and internationally. The company operates in three segments: Research, Consulting, and Events. The Research segment primary subscription research services include Forrester Decisions, Forrester Research, and SiriusDecisions Research, which are designed to provide business and technology leaders with a proven path to growth through customer obsession. This segment delivers content, such as future trends, predictions, and market forecasts; deep consumer and business buyer data and insights; curated best practice models and tools to run business functions; operational and performance benchmarking data; and technology and service market landscapes and vendor evaluations. The Consulting segment provides consulting projects, include conducting maturity assessments, prioritizing best practices, developing strategies, building business cases, selecting technology vendors, structuring organizations, developing content marketing strategies and collateral, and sales tools; and advisory services. The Events segment hosts events related to business-to-business marketing, sales and product leadership, customer experience, security and risk, new technology and innovation, and data strategies and insights. The company sells its products and services through direct sales force in various locations. Forrester Research, Inc. was incorporated in 1983 and is headquartered in Cambridge, Massachusetts.

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.