Investors interested in Engineering - R and D Services stocks are likely familiar with Amentum Holdings (AMTM) and Aecom Technology (ACM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Amentum Holdings and Aecom Technology are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that AMTM likely has seen a stronger improvement to its earnings outlook than ACM has recently. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AMTM currently has a forward P/E ratio of 12.00, while ACM has a forward P/E of 18.31. We also note that AMTM has a PEG ratio of 0.92. 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. ACM currently has a PEG ratio of 1.53.
Another notable valuation metric for AMTM is its P/B ratio of 1.5. 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, ACM has a P/B of 5.1.
These are just a few of the metrics contributing to AMTM's Value grade of A and ACM's Value grade of C.
AMTM sticks out from ACM in both our Zacks Rank and Style Scores models, so value investors will likely feel that AMTM is the better 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
Amentum Holdings, Inc. (AMTM): Free Stock Analysis Report AECOM (ACM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
