FLR or BCKIY: Which Is the Better Value Stock Right Now?

Investors interested in Engineering - R and D Services stocks are likely familiar with Fluor (FLR) and Babcock International Group PLC (BCKIY). 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.

Fluor and Babcock International Group PLC are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that FLR likely has seen a stronger improvement to its earnings outlook than BCKIY 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 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.

FLR currently has a forward P/E ratio of 22.04, while BCKIY has a forward P/E of 24.61. We also note that FLR has a PEG ratio of 1.51. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BCKIY currently has a PEG ratio of 1.71.

Another notable valuation metric for FLR is its P/B ratio of 2.6. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BCKIY has a P/B of 9.58.

Based on these metrics and many more, FLR holds a Value grade of B, while BCKIY has a Value grade of C.

FLR sticks out from BCKIY in both our Zacks Rank and Style Scores models, so value investors will likely feel that FLR is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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