Investors looking for stocks in the Technology Services sector might want to consider either Acuity (AYI) or Amadeus IT Group SA Unsponsored ADR (AMADY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Acuity is sporting a Zacks Rank of #2 (Buy), while Amadeus IT Group SA Unsponsored ADR has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AYI likely has seen a stronger improvement to its earnings outlook than AMADY has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AYI currently has a forward P/E ratio of 17.77, while AMADY has a forward P/E of 21.49. We also note that AYI has a PEG ratio of 1.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMADY currently has a PEG ratio of 3.53.
Another notable valuation metric for AYI is its P/B ratio of 4.02. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AMADY has a P/B of 6.
These metrics, and several others, help AYI earn a Value grade of B, while AMADY has been given a Value grade of C.
AYI has seen stronger estimate revision activity and sports more attractive valuation metrics than AMADY, so it seems like value investors will conclude that AYI is the superior option right now.
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Acuity, Inc. (AYI): Free Stock Analysis Report Amadeus IT Group SA Unsponsored ADR (AMADY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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