Investors with an interest in Engineering - R and D Services stocks have likely encountered both Babcock International Group PLC (BCKIY) and Sterling Infrastructure (STRL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Babcock International Group PLC is sporting a Zacks Rank of #2 (Buy), while Sterling Infrastructure has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BCKIY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BCKIY currently has a forward P/E ratio of 21.31, while STRL has a forward P/E of 41.06. We also note that BCKIY has a PEG ratio of 1.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. STRL currently has a PEG ratio of 2.74.
Another notable valuation metric for BCKIY is its P/B ratio of 10.26. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, STRL has a P/B of 13.11.
Based on these metrics and many more, BCKIY holds a Value grade of B, while STRL has a Value grade of D.
BCKIY stands above STRL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BCKIY is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Babcock International Group PLC (BCKIY): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
