Investors with an interest in Engineering - R and D Services stocks have likely encountered both Aecom Technology (ACM) and Sterling Infrastructure (STRL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Aecom Technology is sporting a Zacks Rank of #2 (Buy), while Sterling Infrastructure has a Zacks Rank of #3 (Hold). This means that ACM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
ACM currently has a forward P/E ratio of 18.18, while STRL has a forward P/E of 34.74. We also note that ACM has a PEG ratio of 1.32. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. STRL currently has a PEG ratio of 2.32.
Another notable valuation metric for ACM is its P/B ratio of 5.1. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, STRL has a P/B of 11.64.
Based on these metrics and many more, ACM holds a Value grade of B, while STRL has a Value grade of F.
ACM has seen stronger estimate revision activity and sports more attractive valuation metrics than STRL, so it seems like value investors will conclude that ACM is the superior option right now.
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AECOM (ACM): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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